Go Hard, Go Early – Take 2
As I commented in a recent post, we are approaching a point where it is not unreasonable to adopt a
Go hard, Go early policy. POS is projected to be a low cost operator, but, at this point we are basically just another would be producer with no track record.
We should position ourselves ahead of the wave and this is a wave that will be on us faster than anticipated. Believe me, in this instance there will be considerable advantages to leading the way.
As a long term shareholder I regularly ask myself why I am holding POS shares. I am persevering because I have confidence the Company Vision is viable and it fits into my understanding of future industrial and societal outcomes. I would state the Company Vision as follows -:
To be a low cost producer of high grade, battery quality nickel sulphide.
Kip, you know I love you – in a non- Kevin Spacey kind of way, (not that there is anything wrong with that). However, to you and others advocating a cautious approach, as Arnie would say; “Don’t be such a girlie man.” IMHO, in this instance
we need to be bold.
Red’s T4 is a happening thing and the battery technology being applied to the transport sector (including most main components; cars especially, trucks, and trains and even planes) will reach a tipping point much earlier than forecast, as has been the case for all sorts of ground breaking technology. Read the technical specifications for electric cars today – they have conquered the main relevant purchasing barriers that had previously existed such as distance, performance, recharge times etc. It is now all about pricing, and, given the fact that volumes are clearly rising rapidly, pricing will improve significantly and quickly reach a point where the main purchasing barrier will be removed. The floodgates will open and the market will go crazy.
To provide an analogous example; let’s think about smart phones. Remember when we snickered at someone using their Blackberry? A couple of years on and smart phones are ubiquitous. Similar recent examples include personal computers and very recently, solar panels.
Our business case for going into production is superior to other producers because we have high grades, low costs and substantial processing facilities. We need to leverage this advantage into financing earlier production compared to our competitors. Being early to market will accrue significant advantages and therefore, it is strategically important.
As I said in my earlier post – We should try and place ourselves ahead of the pack. First producers will be rewarded.
Market Leadership
A quick copy and paste from the internet;
Market leaders enjoy many advantages that non-leaders can only dream of. Advantages include:
- Premium price due to the leader status
- Lower product cost due to economies of scale
- Easy access to decision makers of the target customers
- Get to be included in customers' future plans
- Easier to recruit the best talents because it can advance people's career
As a result, a market leader will have disproportional share of the industry's overall profits which can then provide fuel for further market dominance. This is the virtuous cycle if you are a leader and a vicious cycle if you are an also-run.
As a penny dreadful, in the grand scheme of things, what have we got to lose? On the other hand, potentially, there is a strong upside through becoming a market leading producer. To summarise my thoughts; it is almost time to place our collective SSB’s on the line and just go for it. Of course, I could be wrong. I may not be fully recovered from my full frontal lobotomy, which coincidentally occurred just before I decided to buy into POS. Anyway, this is my view of the world.
If none of this convinces you then I suggest you to turn to a truly great source of wisdom; Monty Python. To quote from their song, Always look on the Bright Side of Life:
I mean – what have you got to lose? You know, you come from nothing – you’re going back to nothing. What have you lost? Nothing.
I am completely unqualified to provide any form of advice, so, as ever, DYOR.
You know it makes sense.
U
(20min delay)