Hot off the press - AGY related media, page-1136

Sorry to put a downer on the lofty expectations some may have but I can guarantee a $150M OT prepayment is not going to happen. Anyone thinking that could come to fruition is just deluded.

Mgt have always been vocal about the off-take being leverage to secure strategic partner funding for future commercial operations.


Future funding will come in the form of a 10-20% equity placement to a strategic partner (hopefully escrowed for 12-24mths).

Ideally the same strategic partner will be signing a binding off take agreement with some form of prepayment as well. JZ has stated the Chinese are happy to do this but less so Japanese & Sth Korean parties.

The problem right now is a punished SP and general li market sentiment is still pretty depressed.

So I agree and think a staged funding approach is what Mgt should be looking to secure ASAP.

Don't get me wrong, I'd be over the moon if they could secure the required funding to skip Stage 2 plant but we need to realise the importance of speed to market and proving the ability to scale up production.

The Chico Olacaputo site (31Ha easement - 30km from Rincon) has access to power, gas and water rights.

Realistically, they could be producing by this time next year if they move on a decision early Q1 2019.

Speed to market = near-term realised revenue.

Let's say they build a 2500tpa Stage 2 plant at Olacaputo.

Combined with the S1 plant output of 500tpa we are looking at a production capacity of 3,000tpa with first production from the S2 plant this time next year.

~$10k USD profit per ton = EBIT of $30M USD per annum

This allows them to prove their scalability, develop an ongoing transactional relationship with customers and position the company to raise funds on less dilutive terms for Stage 3.

Build a 10-12ktpa Stage 3 plant and combined annual output across all 3 sites is 13-15ktpa

Plenty of lessons have been learnt from S1 industrial scale pilot plant... It would be naive to think they won't run into hiccups as processing in scale up so I see advantages in taking a staged approach and going down the Stage 2 plant route.