Cool post
@Rotane. It's just a shame you decided to feature more misinformation, omissions and outright false statements. Let's take a look:
"Tiny resource:the easy bit is buying tenements and have a consultant gloating the amount of Li you could theoretically extract (if you knew how). This is what every explorer does, doesn't it? Easy."Is buying tenements the easy part though? There must be available tenements near your project. Puna Mining is located on the edge of the Rincon Salar, with mountains to the south and east, making expansion in those directions impossible. To the west, RIO has drilled wells up to your border, so persuading them to sell tenements seems unlikely—they wouldn’t want to aid a competitor. This leaves a narrow corridor to the north, currently held by Argentina Lithium Energy’s Don Fermin tenement, another competitor with no incentive to help AGY by selling their land. Even if they did sell, the small land area would offer only a marginal increase to Puna's resource size. Regardless of what happens, AGY will continue to have the smallest resource among established South American producers and one of the smallest among explorers and developers. The location's geology restricts expansion, and significant resource growth would depend on the goodwill of direct competitors.
"Low grade: only relevant if making opex comparatively higher than competitors. Have asked you a number of times if you have the operational cost build up so as to flag this as an issue."Nonsense, of course grade matters. The grade of lithium brine is crucial for maintaining low OPEX and achieving high recoveries due to its direct impact on processing efficiency and economic viability. Higher lithium concentrations in brine mean less volume needs processing to extract the same amount of lithium, reducing energy and reagent consumption per unit of lithium produced and simplifying the extraction process by minimising impurities. This enhances recovery rates, maximizes output, and optimizes resource use, leading to more cost-effective operations. Lower production costs improve market competitiveness and profitability while reducing the environmental footprint of operations through decreased resource use and waste.
"No DFS: well, you just saw an industrial partner chipping in $7.5m without one. Is that relevant to make an investment? Answer: No."Feasibility studies are very relevant in Argentina. Investments in new mining projects and existing projects that increase their production are protected by Law No. 24,196, and therefore benefit from tax stability for a term of 30 years from the filing of the feasibility study. Under this regime, the law guarantees that the qualified company will not be subject, for 30 years, to a total tax burden higher than the one existing at the time of the feasibility study. Section 8 of the Mining Investments Law stipulates that tax stability includes all taxes, such as direct taxes, fees, contributions, and export and import taxes. Unfortunately AGY are yet to submit a feasibility study, therefore the company remains subject to tax fluctuations, unlike other companies who have followed a conventional process and submitted a feasibility study to the Argentinian Government.
"No offtake:Its coming. Both for Stage 2 and 3."It's been coming for years. The closest AGY ever came to an offtake was the HOA with Mitsubishi four years ago.
"No funding for expansion: linked with the above. It will be 2 for 1 type of agreement."You have no idea what it will be, or what it will be linked to. That's what you're hoping for, nothing more. All we can say factually is that AGY haven't been able to secure funding for years now, despite their concerted efforts to attract a strategic partner. We can also say that no lithium developer has ever attracted an investment of the type and scale, relative to market cap, that AGY requires.
"Poor communication: AGY averages 20 announcements per year. Is it poor communication or poor comprehension from readers?"Quantity doesn't equate to quality. Their last announcement had simple spelling mistakes, the Dynamic Modelling Update was pulled up by the ASX for a lack of detail regarding OPEX projections, and pretty much every target communicated has been incorrect. Most updates have been a copy/paste of the last, with cyclical rotations of synonyms for "imminent". On top of this, you had one of the JV partner employees (Francisco Alluralde) disclose price sensitive information (CAPEX budget) during an Argentinian podcast, before that information was communicated to AGY shareholders.
"Other projects paralyzed:This is linked to the fund management point. AGY is an startup, they must prioritize as part of a good cash management strategy"Funds management is one factor, sure, but you've omitted the water rights issue. Even if AGY had plenty of cash, Tonopah still can't progress because Albemarle owns the water rights and has explicitly stated that they are using 100% of their allocation and won't give it up. AGY could try negotiating with Albemarle, but why would they help a direct competitor when they control the water rights for the only producing lithium operation in the USA? Moreover, the person doing the negotiating would be your new COO, James Shay, who clearly left on bad terms with his previous employer, Albemarle. His ill-considered negative inferences about Albemarle would likely not be viewed positively during any future negotiations.
"Low funds on hand: with the recent raise, it looks more than a year is now covered. You don't have a liquidity analysis underpinning you "low cash" statement though. That statement is just a guess."The raise from ATL clearly won't cover a year. ATL have injected ~A$7.5m. Recent cash burn has been ~$4.5m per quarter. The raise therefore equates to approximately 1.6 additional quarters of funding. If external funds are received within six months, it's extremely likely that there'll be another cap raise in Q4 2024.
"High spending relative to output: same as above. You don't know the cash flows, so you don't know how much is spent in production (vs other ramp up activities). Pure guessing / uninformed opinion."We do know the cash flows, and we do know the output. ~A$22m was disbursed to the Puna Mining JV over the last 12 months, and over that same period, ~80 tonnes were produced. That means that $275k has been spent for every tonne produced. That is quite clearly high spending, relative to output.
"High capex: $100mfor resource exploration, process validation (including the build up of a pilot plant), ponds construction and operation, 8 years of overheads, construction of the 2ktpa plant, environmental approvals, resource confirmation, pre-development of the 10ktpa expansion ... $100m is a bargain compared to other developers. Again, pure speculation. Just look to what Rio Tinto is expending next door to get to the same position as AGY. 10 times more."I can somewhat agree with you on the comparison with RIO's expenditure, but just because their project is ridiculously expensive, it doesn't mean that AGY's is cheap. They both co-exist on the spectrum of developments that have turned out to cost much, much more than originally planned.
"Argentina is a third world country: No words for that. I'll others to judge your statement on this."Argentina is considered a third world country due to a combination of economic instability, political turmoil, and social challenges. Despite being rich in natural resources and having a well-educated population, Argentina has faced repeated financial crises, high inflation (currently the highest on earth), and significant debt burdens, leading to periods of recession and economic hardship. Political instability, marked by corruption and inconsistent policies, has hindered long-term development and effective governance. Additionally, social issues such as poverty and inequality persist, impacting the overall quality of life for many Argentinians. 60% of all Argentinians are currently living in poverty, and economic contraction is at its highest rate in years. On top of this, they have an increasingly unstable leader, who is being viewed as tyrannical by much of his population.
These factors collectively contribute to Argentina's classification as a third-world country.
