I've been keeping track of the share price movements of the 3 Oz Lithia producers this year.
PLS ATH: $1.47 PLS current share price: $1.18 Down - 19.73% @25Apr21 - Down 22.11% @10Apr21 - Down 21.10% @6Mar21 - Down 33.67% @30Jan21 - Down 37%
GXY 52 week high: $3.29 (30Jan21) GXY current share price: $4.03 Up - 22.49% @25Apr21 - Up - 11.55% @10Apr - Down 10.03% @6Mar21 - Down 33.13% @30Jan21 - Down 18%
ORE 52 week high: $6.06 (30Jan21) ORE current share price: $6.96 Up - 14.85% @25Apr21 - Up - 14.23% @10Apr21 - Down 8.42% @6Mar21 - Down 29.87% @30Jan21 - Down 17.5%
The PLS ATH may have been blown out by the RCF pump and dump, causing some exaggeration between the ATH and share price at 30Jan21 compared to GXY and ORE. However, clearly the ASX does not recognise that such market manipulation exists. Also, the 3 Oz producers equalised by 6Mar21.
Despite some pre Quarterly ramping by Macquarie Bank, our share price lagged GXY and ORE by about 10% coming into the Quarterly Report. After the CitiSELL rating we lagged even further. Did Citi ever qualify their re rate with reason?
Certainly, the PLS potential for new debt/equity finance caused uncertainty. Tuesday will bring certainty to the market again. My point is, should the market equalise the 3 Oz producers again, the PLS share price should attain some 18.36% above its ATH ... which is ~$1.74.
OK, I appreciate many here will see this as a very loose comparison. Many will say the previous ATH was moreso an aberration of RCF manipulation. However, these are numbers that TA people hang their hat on everyday. Should we disregard TA as merely Tarot and Tea Leaf readers? Yes, IMHO.
However the market close on ATH day was $1.35. Increase that by 18.36% and we're still at $1.60.
Anyway you look at it, the current share price is very low ... relative to GXY and ORE share price movements YTD.
Congratulations to GXY and ORE on the merger. Both will certainly gain by doing so. However both have very questionable management. GXY did a CR for expansion purposes @ $1.80. Their asset values may have increased but not the new cash.
Meanwhile PLS CRed to buy ALO assets which have now increased four fold in value. Now we stand on the precipice of a new Joint Venture that could see us ride the coat tails of leading technology of the South Koreans. A JV with plans to expand five fold by 2030.
PLS, GXY and ORE share prices have all benefited by rising prices for Lithium chemicals. If anything, PLS has outperformed GXY and ORE at a micro level and should be the share price outperformer of the 3.
Ken mentioned at the Quarterly Report Conference Call that Plant 2 will require ordering some long lead items. "This will take time, although not a huge amount of time", he said.
As @Sjlasx said, he could envisage the 2 Plants being used to used to process different ore types. Plant 1 for Flotation and Plant 2 for DMS. Plant 2 already succeeded in doing this, so is Ken really referring to expansion of Plant 2 output? It had nameplate for 220ktpa but at best only achieved 180ktpa. How much more?
Perhaps as many have said, we could use Plant 2 output to meet Plant 1 Stage 2 offtakers. However, if so, why did we bother setting up the GLX Digital Sales platform?
Plant 1 Stage 2 offtake requires production of an additional 450ktpa above Stage 1's 330ktpa. Perhaps we could increase Plant 2 output to 300ktpa and begin Plant 1 Stage 2a increasing output by 100ktpa in 9 months?. Ganfeng, Great Wall and POSCO have already contributed to Plant 1 Stage 2 expansion, in their equity contributions. POSCO's option required them to offer a JV for chemical conversion plant, which they now have apparently. Will our due diligence approve of it? The CapEx appears in line with other projects, perhaps marginally lower. Ganfeng do it much cheaper than most others, especially compared to Oz projects.
Its great to talk of project expansions but as Dale said at the Quarterly, booming Iron Ore prices are causing labour shortages in WA. Will this impact our plans?
If we take this more minimalist approach, we still need to finance Plant 1 Stage 2a, Plant 2 upgrade and POSCO JV downstream investment. I'm expecting more though. I think the GLX Digital Sales platform is a tip that production is planned to exceed offtakers requirements.
Further, given that the Pilbara is the largest Spodumene resource in the world by far, Pilbara producers (who have already proven they can come to market quickly and assuredly) will control output to become the world Spodumene price setter. Maintaining good prices while precluding Spod wannabes from being financed. Why CapEx risky, unproven wannabes when there is an abundance of Spodumene in the supply chain already established?
If the market needs more, the Pilbara can provide it. By Baiame, the power of the Pilbara compels it!
I'm looking forward to the certainty tuesday's Strategy and Outlook session will provide.
(20min delay)
