The logical thing to do if GXY wants to survive in the long term is to sell L1 assets at say $100 mil and rationalise debt so that Jiangsu can service it and when Talison cranks up spodumene price to $500/ton FOB ( which will likely happen within a year) , then GXY can fire up Mt Catlin again.
IMO, L1 was a mistake and Mt Catlin should have been designed to deliver 6% spodumene at less than $300/ton. These is were the company went astray.
South America is years away from production with hundreds of millions required to get it there. GXY now lacks the cred to rise these type of funds.
So in summary, a garage sale to make the retention of Jiangsu possible A delevered Jiangsu can produce 17K tons at $2K/ton margin but it cannot support, IMO, the spending neccessary to take the Brine Deposits into production.
A half loaf is better than no bread.
I am still suspicious, however, that GXY signed up its supply contract with Talison within a week of the Chinese buying Talison. Makes one think!
cheers Moorookamick
GXY Price at posting:
7.8¢ Sentiment: Hold Disclosure: Held
