We've been busy doing quite a lot of background research in the absence of any proper mgmt updates/communication to SHs.
Moving from the more general to the more specific:
Copper and the trade war- who knows!
Cobalt and the price decline. There seems to be a consensus that the cobalt market was caught up in over speculation given the disruption being caused by the EV market - cars, energy storage systems etc but it is expected to come back strongly.
In most countries (other than Australia) the EV market is growing strongly. Governments are mandating the end of conventional, polluting (ICE) engines over the next decade or two. European (BMW, VW, Mercedes etc) and Chinese manufacturers are ramping up production with a variety of new models planned. However, forecasts are that the demand won't really kick in until 2021/2 (approx the time that price parity with ICE is achieved).
Thus, the cobalt price, in the absence of an immediate demand surge, has come down hard.
Recently, a small recovery is underway after Glencore announced mothballing Mutanda in the DRC.
We've also (through sheer perseverance) had some interesting discussions with senior execs from international big mining companies.
They're well aware of the EV disruption and are gearing up albeit backing different mineral solutions depending upon whom you speak to.
Most concerning for us in these conversations was a general lack of awareness of AML/Walford Creek. Moreover when we pointed out what the Walford Creek resource was these same execs were surprised that they weren't more aware of it.
We think this is a direct byproduct of AML's mgmt's total lack of promotion of the resource.
We share Vector's belief that OCP's most likely exit strategy would be to sell AML to the highest bidder but struggle to understand how OCP condone AML mgmt's lack of promotion to lift the poor awareness.
Surely this will cost OCP (and all shareholders) tens of $millions.
Vector, we couldn't agree more with your comments about the unbelievably slow met testing, except that it is closer to two years not one year.
We were told on Nov 8, 2017 that sample ore had been shipped out for cobalt met/roasting. This means it took 21 months to get to the stage of the Bioleach announcement 30/7/19. Not sure there are words in the English language to describe this apparent apathy/lethargy?
Similarly, the environmental work still hasn't finished. The quarterly, 31/3/15 reported that 'Animal Plant Mineral' had commenced on-site environmental work and this would take 2 to 3 years to complete to permitting stage.
Now, 4 and a 1/2 years later, the work is still not complete.
We are similarly at a loss to explain OCP's on-going support for such poor performance.
However, Vector the one thing we are going to have to agree to disagree on is the PEA in 2017.
At this stage the resource had a Cu Eq of 1.4% which is good by world standards. Not great but acceptable when most mines are profitable at around 0.5% Cu.
However, management then put out the PEA with extremely high costs for a shallow open pit mine.
What they didn't realise was that their flawed costing equated to 1.2% Cu Eq rendering Walford Creek uneconomic.
Moreover, they had boasted about how well received the PEA would be by the market.
When the market's negative reaction became obvious, they then put out a series of ASX anns trying to walk back their excessive PEA cost estimate. These all included the statement "confident that estimated costs will be reduced".
Unfortunately, history has shown that this behaviour only exacerbated the feeling of management incompetence.
So, where does that leave us now?
Really excellent geological work has now proven up a very substantial and valuable world class resource but shareholders aren't benefiting, in fact just the opposite.
Yes the share price has been affected by the trade war and cobalt price decline but in our view, not as much as by the market's reaction to all the management stuff ups, missed deadlines, poor communication, and lack of promotion etc.
OCP seem to have a reputation for being tough, even ruthless.
How is it then that the highly remunerated AML mgmt are being left to continue making the same mistakes?
Professional investors and fund managers have repeatedly said that a change to better, proven management would be immediately recognised and rewarded by the market particularly at this important stage of producing the long awaited PFS.
AML Price at posting:
14.0¢ Sentiment: Buy Disclosure: Held
(20min delay)