300ktpa in sight. The below is just my ramblings and should not...

300ktpa in sight.

The below is just my ramblings and should not be taken as financial advice.

It’s always been exciting being a TAW and now A40 holder through the metamorphosis from iron ore shell just three years ago to a major lithium spodumene producer today and now .......soon likely to be a lithium hydroxide producer, things are about to get a whole lot more interesting for this little “engine that could”.

The GXY deal to put more funds (after its initial 4.9% at 30-40c ) into A40 was a head scratcher as it’s not screaming of takeover to me. What else was the gameplan from GXY ? Good question and while I don’t have concrete evidence my theory is that what I think we are going to see will be a rejig of the current A40 offtake with Burwill/Jiangte that has a 100ktpa commitment till dec 2022.

GXY have gotten their plant humming to full capacity with the addition of their fines, now they have excess supply which is suitable for carbonate production, but they need customers......

What GXY could do is takeover the current A40 offtake and gain another willing customer for its lower grade spodumene which is more suited to just the carbonate grade (lico). Burwill/Jiangte may actually be ok with this scenario as they may be more price sensitive to a high premium product from BH ....in other words they may not require a premium grade and product.

That would then leave A40 wide open with all (100% of its production of premium (low iron low mica and all those other deleterious elements) spodumene to go to lithium hydroxide partnerships in Korea and Japan (non Chinese) who want/need better feedstock to get a premium hydroxide product with greater yield and lower costs for those longer range/larger capacity fancy electric cars we are demanding.

An interesting excerpt below from a document highlighting the effect of impurities in spodumene concentrate shows the benefits of A40 low impurity concentrate will be highly valued and “strategic”

As has been pointed out in the Hydroxide MOU, the obvious benefits to A40 is the increased margin. So it’s a no brainer - LIOH is Currently the holy grail of any hard rock/brine producer and the key to it all undoubtedly is the quality of the deposit. They all say that they have quality but now is when we will start to see the cream rise to the top when it comes to hard rock producers. A40 is that cream.

https://drive.google.com/file/d/1yc0_AgcSfHgIFK1DiJ6BQiNB1zZSVUrM/view

In the clip above I have included from a recent presentation, MC stated that by sep/oct this year we can expect production of “20kt a month” - this equates to 240ktpa and is BEFORE the introduction of the fines circuit later in Q4 which which should Increase production by 25% - 300ktpa and lower the production costs to below AUD$400.

Incidentally, just on costs - over the last year or more, a lot of talk has been on strip ratio - From quarterly >>>The strip ratio for the Quarter was 15.5:1 which was higher than the average strip ratio of 11.5:1 planned for calendar year 2019 so average for next three quarters is already down to 9.6:1 and much lower in 2020 where we have been provided with 4.1:1 strip ratio guidance. So like i mentioned above get set for costs to be USD$400 (net tantalum credits) and most likely targeting below that.



So we are just beginning to get a taste of the exciting future to come and once the next offtake drops we may see a few more hints. Also a resource upgrade or two this calendar year will enable MC to really push the story out there and should also give the valuation a substantial lift. See below from a broker report last year: