Hi.
Apologies for starting a new thread and a very unsexy thread title at that
and also for this post being as long as War & Peace.
I don’t really want to disrupt any of the other threads with this post
but I do have a few things I’d like to say about what has been going on
and somebody out there might find my notes interesting or handy at this time.
Goes without saying that the last few weeks have been utterly surreal.
Morgan Stanley really pulled off the improbable heist of the year at Galaxy
and the lithium sector
by a co-ordinated shorting assault and a Everybody-Look-Over-There-Trick
at Chinese spot prices while they were dealing with some truly awful low quality Chinese-made carbonate that nobody wants to buy.
The quality of some of this recent Chinese brine on the market is so awful that some auto manufacturers are cancelling their orders
and waiting for new suppliers. Hence some bargain basement prices on offer at the technical grade end of the market.
The stuff really should go to the lithium grease market - not powering cars etc.
The real price picture is that we have seen recent prices of carbonate price of around $16.5k USD/ton.
source Benchmark Intelligence. 20th August
http://www.benchmarkminerals.com/ch...-not-the-full-picture-to-an-industry-surging/btw: This link is really worth reading for a better understanding about recent lithium pricingThat’s interesting. This is the last reference I’ve seen to lithium pricing
That is exactly in the range that Galaxy has always used as a conservative price guide.
So -
What is the big deal about pricing?
It’s still higher than AT uses in his own profit calculations and powerpoint presentations.Even more alarming for the Price Is Dropping Crowd - Hydroxide is still holding around $18kUSD/ton.
Galaxy supplies hydroxide converters and that price is very nice thankyouverymuch
and doesn’t put any pricing pressure
on Galaxy’s spodumene contracts that supply these converters. ‘
Everybody can make bank at these prices
and supports ongoing spodumene supply contracts at higher than $1000 USD/ton.
One thing worth noting is the comment from the above Benchmark link about the recent Chinese spot price.
"
It is an early correction to the lithium carbonate market in China that will go through several phases of growth over the next decade.
The growth of anything, let alone an industry that is increasing seven-fold in the next ten years, is not linear. There will bumps in the road as each part of the battery supply chain – from lithium mine to chemical plant to cathode and battery manufacturing – builds out.
This will not happen entirely in unison and as a result the road will not be smooth, but the trajectory remains the same."
Thanks Simon Moore. Again. I recommend reading the link above for a lot more detail about this pricing stuff.
I’ve heard mention that some technical grade carbonate has gone for $13k recently as some justification for this downturn and shorting.
That price should not surprise anyone.
Some of ORE’s shipments have gone for less over the last 12months.
Big deal.
Price is dependent on quality, grade, impurities etc.
Shocking stuff, I know.
If there are shorters that are opening positions on Chinese spot price rationale then
I pity the poor research they have done on this sector.
There are a variety of differing price points for at least 4 majorly different lithium products
and sub-grades within those. Lumping them together and pointing at one as an indicator for the entire lithium industry is plain stupid.
They deserve to lose those trades.
As far as I see in all the recent deluge of misinformation and media hype,
all it does is reinforce that Galaxy’s management have been providing accurate but still conservative guidance
from the get-go, all the way beck to the first really impressive overview I ever saw of the sector
when AT gave his speech at the Swiss Mining Institute in 2016.
There is nothing I have seen presented recently that suggests that GXY will not need to refactor any of their own price projection work to accomodate the latest price movements in China, nor to feel at all like they haven't every chance of negotiating an incrementally higher tonnage price for 2019 based on the quality coming off the new circuits.
Yes. The carbonate price has been over $20k/ton in the last year.
But it was never taken that seriously as a sustainable price.
Only perhaps by the most over-the-top lithium rampers in spec stocks.
Even when it was there nobody made the mistake of using that price to do their calcs.
Around $15kUSD/ton has been the standard I’ve seen by anyone with any credibility.
But - the main point is - lithium is already Very Profitable and Sustainable at this current price point.
And - yes Morgan Stanley - even at $9k USD/ton we’d still be in the game.
Bring it on. SDV can produce finished product for around $3k/ton.
We’ll see who else survives an attempt at future price squeezing.
Anyway.
Back to Morgan Stanley’s Galaxy Heist.
It was sort of like having the wedding limo for Galaxy and Posco
stolen from under our noses right outside the church
and see them hooning off in it to rob a local bank with our money in it
with the Just Married signs still flapping around on the limo
and the cans bouncing along in the streets.
Audacious as it may have been to the Pin-Striped Suited Floor Traders
it was an utterly bastardly act of pure manipulation and vindictiveness.
Crappy wedding present to get as well…
There they were - mooning out the back window of the limo to the cops chasing it down the street
because it wasn’t really about anything but sheer power to do whatever they want
and ignore all common sense
all reasonable valuation metrics.
POSCO and Galaxy was the Lithium Wedding of the Year - and they were trashed it like a Mad Max movie set.
As a share holder its been a major case of WTF.
Yeah. OK. Unreasonable force. Unethically applied. Global media coverage. Uncovered shorts.
Unfinished story I say
and that is why I have a Buy sentiment.
You guys panic all you want.
I will wait this one out.
There is a lithium industry to build and Galaxy are the one that is best set up to join the top group of major suppliers.
But. Not everyone believes that. Obviously. The share price has been smacked down again.
We are currently being skewered for 2 things that currently have nothing to do with us.
- Argentinian export taxes
- The price of carbonate
We do not currently export anything from Argentina
and we currently supply Chinese hydroxide converters.
And - again - to top it off. POSCO have reiterated their enthusiasm for their new deal at SDV.
End of story.
Galaxy = Not Guilty.
Shorters have won nothing from me.
I wasn’t going anywhere until all 3 mines were running
and maybe not even then - depending on the dividends offered.
Those 3 operations have never looked closer to being fully financed and partnered-up
than they have in the last couple of weeks.
POSCO have done their due diligence on lithium and the deal is binding.
That payment must be factored in to all discussions of value of this stock.
But it isn’t. Yet.
MS have monstered the press and the bad press is doing their bidding.
It is as if that $380m AUD deal never happened.
The earnings call was a major highlight for me.
It had the last bits of info I needed to understand what they have been working on
and how they are thinking about this next phase.
I hope that management are able to filter out all the noise they must be getting on the phones from upset retailers
and keep focused,
because I think the earnings call showed the amount and scale of work that was going on in the Galaxy offices.
I hope they can maintain this current set of expansion strategies and calmly work those deals into place for SDV JV and offtake, JB mine and processor and Mt Cattlin’s vertical integration with a processor.
I am not concerned about the share price today or any lasting impact of this Big Dip.
Selling at $2.50 is not an option to me. No freaking way. I am seeing this one through
and it may even end up having a little silver lining for GXY holders.
This volatility is knocking out future competitors left, right and centre
because it was all started with a misinformation campaign initiated by SQM to do just that - cull the next generation, starve them of finance, survival of the fittest etc.
There are a lot of people that want to see lithium companies put under pressure right now.
The simple reality is that with no debt and a well-tuned plant at Mt Cattlin
Galaxy has already established itself as a survivor
and will play an important role in the Renewable Revolution.
Whilst there is a 17-18% short percentage sitting against Galaxy - all it means
is the shorters have robbed the bank but have still got to make the getaway.
It means - just like the old Einstein theory - that the energy has not been destroyed,
its just temporarily stored in another form - in that short position.
And that is the big difference between us and the other lithium stocks - our pathway back up is sitting right there
ready to be tapped.
An unresolved problem for those with uncovered positions.
IF they don’t take this last opportunity to cover now into the confusion about Argentina
then they have missed the best chance they have to scramble out with a win.
As for MS - I would prefer to see Morgan Stanley go long here than get massively burnt.
I have a feeling that is exactly what they always intended to do.
There is enough pain in the world. Being burnt is one of the worst ways to go.
I think they would never have even knocked on our door if they did not see the enormous potential.
It is absolutely not clear that despite the share price movement that this has been a profitable trade for them.
They paid for the first 50c with cold hard cash to bring it down.
All the evidence that we have in the Sub Holding documents
points to them simply selling to themselves on the way down.
Just put things back the way you found them soon, will you? Thanks, Morgan.
Let’s not forget that Morgan Stanley started as regular long buyers on the back of the buying opportunity
they had created for themselves by re-reprinting and interpreting SQM’s El Fantastico Expansion Report
but it was all taking too long, waiting in the queues with us plebs,
so they started borrowing.
Then SDV started looking like it was getting closer.
They borrowed a heap more and (imho) voted down our lovely Argentinian lady lawyer’s pay cheque
with the newly borrowed votes in an attempt to stall progress (imo).
This is why Mr Rowley got so upset at the AGM (imo).
He knew why the vote had failed and that it was an act of simple sabotage (imo).
The SDV deal was already too far advanced and MS were caught out with a lot of shares borrowed
and the price above what they paid for them
so they sold down by borrowing more.
Then the second confirmation announcement (DD passed by POSCO and the new pro-lithium boss incoming).
That was the real bitch.
Galaxy did something out of the ordinary here.
A follow up announcement to say “yeah. really. It is happening.”
The second price rise caught them again in the headlights
with their pants around their ankles and all the dash cam footage
of their wicked ways.
They were forced by one of the lenders into a 7m collateral trade to cover what appears to be something similar
to a margin call provision in these lending docs.
If there had been a way of avoiding this “outing” then surely MS would have done it.
But presumably its much quicker than that.
They were busted.
This, ladies and gents, was where they nearly came a cropper.
Luckily - everybody was so confused by MS (and Mitubishi!!! - not really) suddenly becoming a Sub Holder
that whoever had the economic might to really put them to the sword
and push the price a few more cents (forcing a more widespread margin call)
didn’t.
Lucky Morgan Stanley.
Unlucky us.
And then they probably just got angry about what happened.
The sub holding announcement was a complete embarrassment.
It showed they bought a stock in a sector they were trashing, then trashed it to make it look they were right.
It wasn’t about making good calls, or judging the fundamentals
or even -
shock horror -
about Making Money.
It was just that Galaxy management had outmanoeuvred them
and caught them on the wrong foot.
Far from a triumph, and despite the subsequent impact it wasn’t a good look.
It looks amateurish and I expect the lead traders on this got the Don’t Come Monday memos.
Some 20 something slicked back hair dude on the 31st floor was probably selling the idea that fossil fuel is going to make a 4th quarter recovery
and that lithium will stagger and fall short. Or at the very least - the whole counter-logical trade would appeal to the bias of those that were heavily invested in those stocks and attract a bit of attentions.
No freaking chance.
Everybody can see the renewable/grid/EV progress now.
Australia is just backwater enough to still swallow the story that it may take another 20 years
so we gun down our local lithium heroes with the best chance of climbing to the front rank of lithium producers,
all so some US instos can get themselves a massive position in the lull before it all heats up again.
As for how the manipulation was accomplished -
If we had stronger regulators then the bloody paw prints and trades and false reports would see pin-striped suit dudes going to share a jail with Bubba and some dropped soap
for selling to themselves, for shorting off market, for stacking buy and sell sides
for misleading and effectively stealing from the clients they advise etc etc.
Well - you can only dream of a more level playing field.
I know some that are currently a lot angrier than anybody here and wanting to re-enact that scene from the Accountant with the piano wire in the BMW.
“You will stop shorting Galaxy. You will publish a new report positive on lithium”.
Check the back-seats before you drive off boys...
SO.
Let’s reverse a little. Not in the BMW. Or the stock price. We’ve done enough of that.
Back to SQM. Because they are the source of this River of BS.
SQM release their El Fantastico Expansion report a few months ago
(with a Free Taco if you believed it)
and it seemed to be entirely commissioned to show that SQM were going to just squeak past Albemarle in 4 years time by a couple of percentage.
Really - that seemed the entire point of it. One-upping the other American major and beating them.
Sick of being second they invented a number that would work to get them to the top of the Leader Board.
Morgan Stanley were looking for something sexy and it fit their criteria for a Bear stance on lithium.
They deluged the press with rivers of brine oversupply.
It was all a beat up. Just like last time.
No experts backed SQM’s plans as being possible or could occur with the costings they were talking about.
MS decided a 45% reduction target would have the best impact
and they seem to have plucked that idea from a 2 minute analysis about Chilean royalty payments - suggesting that because SQM have less reason to push the price into the teens, that they will start to cap the price at that point. Still comfortably in profit for a brine operation.
This is awful logic.
Aside from the fact that SQM would be killing their own golden goose and
making their new investment in KDR irrelevant and unnecessary (it still might be)
it ignored the fact
that both ALB and SQM were talking up brine expansion in Chile while already knowing that it was getting harder and harder to do brine business with the Chilean govt.
This goes all the way back to the corrupt way that SQM emerged as a private business but still owned by ex-govt head honchos.
Much resentment between the new Left wing govt and the old right wing leaders who feathered their nests.
They seem to want to extract more than their pound of flesh now
and
good old socialist red tape can be the stickiest kind.
Its not at all reasonable that there will be a quick resolution to the water restrictions and production limitations that SQM now face.
Certainly everything has changed in Chile. But there was no admission of failure by Morgan Stanley who have kept pushing their bearish view.
The only thing left to support it is Chinese spot price (way too random and irrelevant to be an entire sector indicator)
and the ongoing tremors in the lithium stocks still shaking from the 30-50% corrections that have been inflicted on the juniors.
Perhaps there will be some good to come of it for GXY investors aside from the benefits of topping up again (and again).
Eventually the investors in less well-endowed and less healthy juniors will get tired of having to fight for news of investment and CRs and
abandon ship to fall in behind the lithium companies with actual fundmentals that can be quantified, actual production and increasing news flow.
Companies like .. erm … here is one … Galaxy.
As the sector matures we will eventually see the growth of better lithium price indicators (London Metals Exchange - please get your act together)
and this opaque sector may get a lot more light shone on it.
Now - we already knew SQM’s expansion plans were a crock because all their other numbers were so crappy.
It generally follows. Hard to trust one set of figures if everything else on the page is dodgy.
It was like the graphic designer was briefed to make the pie charts look a particular way and nobody checked the final release version for accuracy.
Galaxy got a little mention and we can tell how incorrect they were by them even failing to get the reported production numbers for LAST YEAR correct.
Its not worthwhile going through the other errors in the chart or quantifying what percentage Galaxy would have of world production in 2022 with 3 plants running.
The main thing right now is that Chilean water restrictions mean that both ALB and SQM may now struggle to retain their current production level, let alone increase their global share. And that means their clients will be looking elsewhere.
So - exactly why did Galaxy get a mention from SQM?
Because smart cookies in the banks and instos and at the Lithium Big Boy’s table have got a reasonable look now at Galaxy
moving up the middle, all dangerous but still with puppy dog eyes - just like ScoMo.
Galaxy and POSCO are the 2 new players that can nudge into the Big 4.
Now that SQM and ALB’s forward supply is going to be approx 100ktpa short of promises
where are their clients’ going to find their supply.
The world needs Giant Brine to get going. Big Auto needs it
and there is a big load of cash already heading into Sal de Vida. More will start pouring in soon enough.
What salar could they possibly be looking at to upgrade/upscale and get fries with that.
40 year LOM at 25ktpa.
We’ve already heard about SDV at 50ktpa.
What about 100ktpa? 150ktpa? 200ktpa?
How big are our JV partners and how deep are their pockets?
If Big Auto was already looking forward to deliveries from the expanded Chilean briners - then its now going to have to knock on the door of Argentine brine,
simply because hard rock can not scale up this big.
Forget Mt Cattlin moving up to 220-240ktpa and moving into vertical integration. For the moment.
I know its hard.
It will be nice to see 20ktpa going out each month
but
The real story is Sal de Vida.
We have POSCO basically reaffirming everything that the 3x DFS studies have already said
about the quality.
Its the best brine on the planet.
And POSCO are no slouches with Lithium with years of experience.
The old boss was the guy who was behind their old Fast Brine tech.
Choi, the new boss is even more Lithium-centric
and his rise to the top means that they are ready to back themselves very hard to tackle Panasonic/LG
and get amongst the Big Battery players
but with the important advantage of having a fully integrated supply chain as well (inc cobalt).
tsk tsk LG/Panasonic.
You probably have your supply contracts already…
but uh oh.
No ALB/SQM expansion.
hmmm...
back to Galaxy.
Anthony Tse has said that there are 3 more things in the pipes for SDV.
One is good old JP Morgan modelling
- Final Investment Decision
- What minority percentage stake to offload. 40% of $1.4b USD NPV would be $560mUSD?
- What offtake deals are being offered.
We know that there are some tax implications but we are still talking about massive amounts of cash here.
That is why the instos may have seen it as an excellent time to trash the share price now
and take large positions on the back of the short-infused bargains.
There is a clear path now to Galaxy having more cash than market cap
and that comes about as soon as any reasonably sized JV at SDV is put on the table.
Given that a JV for SDV would also share the construction capex then its pretty clear that Galaxy how easily
the company would find it to finance their share of SDV.
Please excuse the rough figures. These are only meant to emphasise how Galaxy can easily finance
the next 2 mines from a JV at SDV.
Let’s round up the full SDV capex to $500m. 40% JV would logically mean that the partner was on the hook for $200m.
That capex bill is now $300m and the 40% JV (at NPV valuation) is $560m USD.
That remaining $260m USD is virtually the entire capex of James Bay with a processor.
And there is still 3 more sets of investors that are mentioned to add further cash.
- SDV Offtake
- James Bay joint venture
- James Bay offtake
This unrivalled cash-rich position must be also what is making James Bay suddenly jump to a new 40ktpa hydroxide processor.
That too seems to have its own set of JV and offtake partners waiting in the wings.
That upgrade to a 40ktpa hydroxide operation implies that the plant may be larger than Mt Cattlin by about 30%.
Again, if this is JV-ed and equity in the project is sold then that is even more cash to come in.
The enviro process seems to be entering its last stages
and that mention of 40ktpa means that the company must be quite confident of sustained operation through the winter months.
Makes sense.
There are literally dozens of large mining operations in Canada that are operating much further north.
My guess is that the amounts of money that are now being discussed in the negotiation rooms
is precisely why the management would be unconcerned at the manipulation going on.
They have mentioned the possibility that they could look into rewarding share holders.
A token gesture might be fine. Perhaps even just the interest from the bank.
If it is the difference between a JV and going it alone at any of the projects
then clearly SIZE MATTERS and all LT holders would prefer to see the operations held as tightly as possible.
As a stoic supporter of getting all three operations up and running,
I’m in broad agreement with those who are wanting Galaxy to put the cash into growth.
But.. how much cash is the company going to have?
They are potentially already looking a surplus of cash beyond what is required to build both new plants
without even needing Mt Cattlin’s increasing contribution.
It’s jaw-dropping amounts of cash and no wonder the sharks have moved in.
Retail sees a bit of red and needs diapers. These guys have listened to the earnings call
and would have been drooling on their American Psycho shiny shoes.
If we headed into a period of massive surplus and the share price still has not responded properly
then it may be time for Galaxy to start changing financial strategies.
It is probably a little too early to buy more assets.
If offering a dividend was able to change the investment profile away from the current profile volatility of massive swings
into steady growth backed by regular profit-sharing from the company
then I’d be all for it. With the new operations starting to return additional capital within the space of a couple of years
then I’d be all for a bit of Mt Cattlin’s profit being returned to pay us all for our Extreme Patience.
At the end of the day I believe that the lack of dividends at this point is the rationale for the lenders to go for a bit of easy cash from rentals.
The big instos got on board to park large amounts of cash that would win them Green Kudos points from
a new breed of investors who do not want Fossil investments in their portfolios
and right now they have a good low buy in price for the eventual dividends
that will come either now or in the early 2020s.
They have parked a lot of their holdings in lending contracts so that there is some bacon to bring home
without needing to do any risky trading.
But
Clearly they do not believe any of this will have long term impact on the share price.
Or at the very least - any that will outlast the next spike where they may just love it if retail sell out
on the first hint of green.
The current share price would be double this if the stock wasn’t heavily shorted
and the borrowing percentage isn’t that good.
We were neck and neck with PLS until shorts moved in here with our earlier entry in the ASX200.
PLS are now gaining short positions very quickly. Though I wouldn’t wish it on my worst enemy,
they have somehow remained aloof from the lithium sentiments and there is no fundamental reason
why they should be valued higher than Galaxy at this point.
Anyway. Back to the lenders of Galaxy shares.
Even though my day-trading chops are a bit rusty
I reckon I could do a bit better than the simple rental return they are getting.
Certainly others on this forum have displayed good instincts for the swings.
Are the lending instos just no good at it?
Why lend their shares to MS to make all the money instead of them?
Simple.
They’re buying at the bottom. It’s a risk free strategy for them - as long as they
make sure that the long term chart is healthy and that it has decent regular rallies
to keep the money flowing in.
New York Life Insurance ratcheted up to nearly 10% of the company as soon as the share price dipped under $3.
They were the ones buying at $4 a few months ago. Now they’re the largest share holder.
That’s how quick things can change.
Right about now is generally the season of lithium recovery
as we move towards contract discussion for 2019 supply
and the real order books come out.
(btw: Has anyone ever charted Galaxy’s share price against Perth temperature and rainfall?)
I have a few ideas how the company could make things more difficult to be shorted.
Not all of them are legal. But that didn’t seem to be important to the shorters either
as I’m pretty sure they've busted every rule in the ASIC handbook.
I don’t think any of them are necessary.
We certainly don’t want rubber burnt off all our tyres just
to get a few whoops from the crowd.
We need to get more visible displays of the progress.
More short-term-centric knee jerks is reacting from a place of pain
when all is required from GXY is a straight bat and a good eye.
Catch the sp on the turn and people will stop all these stupid threads
about nothing
and instead track the development of the 2 new mines and Galaxy’s race to the Majors.
Some say that we deserve to be down here because of the lithium price.
What? The spot price? Is that all they have?
Oh. No its more than that. Its the Morgan Stanley Over Supply pricing that is to come.
Gimme a break.
In that case I will gladly accept that as the rationale and look forward to a massive correction once the low grade Chinese carbonate has pushed its way through the system like an indigestible fat berg of crap quality from their lousy brine lakes.
I guess at some point we had to deal with that element of supply.
Well here it is. The Chinese poisoned a dozen water ways to get those brine lakes happening and its going to blow up a bunch of poor Chinese people on E-bikes. That’s why a bunch of EV manufacturers won’t touch it.
The earnings call was a good one.
Even Morgan Stanley were respectful
and not a single mention of anything like a justification for shorting.
AT dealt with pricing forecasts comprehensively
and the new plans - vertical integration instead of tolling, upscaling JB etc
were all music to my ears.
For this reason I am mostly relaxed about whatever the share price is doing.
Its really struggling to understand the scope of what Galaxy is doing
and I can see that Galaxy is wanting to play this completely straight,
without making too many promises.
Thing is - we’d love to hear more.
AT generally delivers on what he promises and in plenty of cases its an even better result.
Selling SDV North (when we didn’t even know it was there to sell) was one example.
Upgrading a tolling arrangment to the possibility of a processor jv.
Upgrading JB from a Mt Cattlin copy to a 40ktpa integrated hydroxide processor.
Am I repeating myself here on the menu items?
I’ll stop.
I’m guessing AT isn’t exactly crying in a pillow about all this right now
but jeez he’d be damn right to stare out from his penthouse with a single malt and a 1000 yard stare
and think to himself
"this lithium market is one hell of a freaky and demanding bitch".
For the moment all eyes are on Argentina.
Its a shame for all of us that the market did not spend more than a few minutes noticing the stirling job that management did with the deal
here before smashing the sp to pieces.
Perhaps some people here on Hot Copper who were so eager to line up to cast doubt and trash it
and push their own lithium stocks
should have realised
that it has been one of the absolutely shining lights to disprove the OverSupply Theory.
Its yet another example of the worst aspects of this site.
Out of pure vindictiveness there are posters who will gladly sink the life-boats
and drown themselves in the process
rather than ever give any respect to a competitor.
Napoleon once asked for lucky generals, not good ones.
We’d be better off being a bit luckier than fundamentally/strategically strong.
Now its the unlucky turn of events in Argentina that we’re supposed to be concerned about.
But what effect does it have on us?
We’re not selling lithium to the Argentinians, or borrowing or banking money with them.
We are employers and there are often many advantages in the arbitrage between Fat USD and local currencies that have been devalued.
Without being to exploitative Sal de Vida was already located in a backwater region
that has not changed that much in 200 years.
Wages for experienced miners were already $15kUSD/year before the currency squeeze.
Argentina capex is likely to be predominantly apportioned similarly to ORE’s construction.
Most of the expense is in bringing in plant, hoppers and factory equipment from elsewhere and probably paid for in USD.
The Argentine component is in earthworks and construction labour and concrete etc. Even these contracts are probably done in USD.
If anything there will be a good cost saving on some items that have now become insanely cheap.
Things have a way of working out and achieving normalcy even when it can look a little chaotic from outside.
Construction should continue and Galaxy won’t be in a bubble but it may well have timed this one more luckier than
we think. The savings on wages and construction may well rewards us with additional ponds and a bigger plant for the same costs.
Currency nerds are expecting the Argentine peso to stabilise back to July levels by the end of the quarter to around 31.89/USD and hover around there for a year. I guess they see the IMF loans doing the right job of stabilising things.
On the bright side - if the temporary export taxes come off as planned then we have a nice share price bounce we can book in for 2020.
Certainly, the recent financial turmoil doesn’t seem to have impacted on POSCO’s plans who have been in the Korean press very recently trumpeting their plans in Argentina and the deal they’ve done with GXY.
The IMF funds being released to Argentina should take this off the front page again and we’ll have other things to think about.
I’m not sure what or any impact this is going to have on actual bottom line and the market has taken the most pessimistic view possible. That leaves a lot of upside to get back to where we were, and a lot more to factor in the recent positive improvements in Galaxy's fortunes.
I don't post here very often as I don't like to be seen as some ramper.
I'd just like to drop in once in a while and write the odd essay.
I only tell my close friends when to buy.
btw: One last stat.
Last time I posted Galaxy had 46k month views. Now it has doubled.
How may are on the sidelines waiting with their wallets for the run to start?
These are not logical/fundamental times and I don’t think the share price is responding to the simple logic
that the POSCO deal is a massive positive and that Galaxy’s share price should be higher than it was before the deal was done.
Not lower.
My lovely wife (She Who Must Be Obeyed) had a quick look today and said Buy More - and I thank my lucky stars she said that
because otherwise I would have bought them anyway.
And yeah.
I’m not selling these until all Galaxy has its 3 plants
and that may or may not be the kind of strategy that many of you are adopting here.
I just hope there are a few more that are able to hang in to celebrate with me in a couple/few years’ time.
I think there will be.
All the best.
Hang in there
AC
