Hi Welsho,I had a read of the December announcement re: Traxy's....

Hi Welsho,

I had a read of the December announcement re: Traxy's. It seems to be a positive step forward and simultaneously a deviation from the very recent guidance from management. You already know my opinions about LPD management and the tendency to bait and switch. The real story always emerges, but after a time delay when LPD then tries to distract SH by pointing to something new that Strategic Metallurgy has been working on.

Setting that aside, I have been reading the various ways people here are trying to make sense of the role that Traxy's might play in the life of LPD. Keeping this post specific to the LPD / Traxys relationship and majoring on the battery spec LiCO2/LiOH (ignoring Cs and Rb for the moment) ... here is what i understand / don't understand so far;
1. This news is framed as sales agreement, not a product consumer (offtake) agreement. LPD management chose the words, not me.
2. Ok. So what. Most start ups seek (and pay for) agents in order to leverage the marketing and network capabilities of the agent. Practical.
3. In the world of specialty chems. there is a lengthy product qualification period. We know this from our conversations over the past 4-5years. As far as I understand customer contact (BASF, etc) and product qualification has been initiated and completed directly with product consumers by LPD (no intermediary?).
4. Then, at the last step LPD inserts a sales agent for the "easiest step" when most of hardest challenges have been overcome and the highest value services of a sales agent seem redundant.

I am working my way through the detail to better understand Traxy's role in life. I take your point about the possibility that LPD might want to use Traxy's in a similar way to the how PLS uses BMX auctions. What i am unsure about is how LPD might use a type of "auction" for specialty chems that will subsequently require a lengthy and customised product qualification process. This product qual. period is the thing we all hang our hats on when hoping for a large PE ratio (18-25). LPD is a technology company and once a product is qualified the customer relationship is "sticky".

If LPD is exploring "auctions" then it starts to resemble a commodity product (at least to me). None of us believe LPD is producing a commodity product (unless we are talking about Cs, Rb or off-spec lithium in the 'early stages'). However, the announcement says the Traxy's sales agreement is a 7 year deal which takes it way past the ramp up period. Finally, i understood LPD signed an agreement with a purchaser in Q3 FY 2021 for the off-spec lithium? I could be wrong.

I have not been able to form a strong view about this deal. Not to say i think it is somehow uncommercial, its just that in my opening paragraph confess that it raises more questions for me than it answers.

Hopefully there are a few howlers in the above that can be easily clarified and I can update my thinking. Perhaps its just a waiting game to see how other bits of the puzzle fall into place.

Anyway, happy new year to all and go the slow 'pus.
A