Good News & Bad News, page-609

Definitely!

Conveniently, this opinion is not necessarily my own. Rather, I will largely paraphrase what is the most likely operationally, since exact cost and terms would decided internally and split equal to that of the ratio of the JV.

We have luck on our side in the sense that this has largely been done before. The best example is an obvious one with Wodgina JV (MRL / Albermarle).

I will attach the JV terms for your consideration, which you will note are near exactly what you are describing.




I think PLS will largely follow suit.

Perhaps not quite 50:50 but certainly similar in the sense that they would be solely responsible for constructing and funding the fixed infrastructure and processing plants (we already have the plants and most of the capacity upgrades through feasibility studies) and would just need the cash injection by completion of a % sale of the company.

As such, I don't think there would necessarily be a cost of concentrate being sold to the JV partner, rather they would just work together in creating the downstream product (lithium hydroxide) and take a split of the revenue / opex within the JV.

I would rather it this way in contrast to something like Mt Marion which is relatively similar in the sense that MRL acquired the 14% or whatever it was from Neometals and they own 50% of the holding company that owns the Mt Marion Lithium Project with Ganfeng holding the other 50%.

As you'll note history took a bit of a turn a year later with the revised JV terms which I think PLS could be more likely reflect.



It's obvious now given the company presentations and videos that there is a second hydroxide facility being considered.

It's a bit of a stretch but personally, it is my hope that if they can sell a bit of the project and use those funds to tie up Plant 2 in a JV and continue with POSCO Plant 1 Stage 2 as advised then we could get the best of both worlds.

Plant 1 > Current OT partners / excess capacity on platform platform market = spodumene spot market.
Plant 1 Stage 2 > POSCO = hydroxide share
Plant 1 Stage 3 ->Perhaps POSCO again or sales platform = spodumene spot market.

Sell stake in the business and fund...
Plant 2 Stage 1+2+3 to JV partner lithium chemicals business.

This scenario is a bit of dreaming but it would turn PLS from a spodumene business to largely a lithium chemicals business and would capture the upside in hydroxide which is where the future is.

Would also be happy for output to be mixed 50/50ish with half the spod moving into hydroxide and half output moving into the spot market.

I don't think we would ever cap prices on hydroxide by bringing this on as it would take maybe 2 years things going well to get it up and running.

Yes I am aware POSCO have plans to make it much earlier but that is POSCO - other JV partner would need to prove process.

Anyway, I suppose it's fun speculating. I am really just trying to keep an eye on demand at the moment. So long as that keeps rocketing, which legislation and policy would leave you to believe it will, then I am happy.

Happy to hold PLS for all the years to come touch wood they don't stuff things up.