Thankyou to those advocating patience. Yes we've been delayed a long time since we originally thought they'd be building (24 months?).
Bit of grumbling is ok, I'm p*ssed i'm about to do my a*se on LPDOD for sure, but I'm also surprised at the total u-turns from some are just massively unjustified. The reasons why I'm not overly bothered:
1. DFC is at late stage legal DD - yes it could fall over, would it be so advanced though if it wasn't a strong chance? be a big waste of DFC resources. I'll admit the potential for UAE to directly finance may be a spanner in the works though I fail to see how this would be a new proposition/not countenanced some time ago and DFC has probably been in the tent a while. And if DFC pulls out, then is it really a huge worry that the UAE steps in? a country with massive cash reserves presently but facing a desperate need to transition out of an oil based economy, and therefore with a strong impetus to be viewed as a reliable partner for foreign investors??
2. While i'd like to have seen more management buying, the continued presence of Jeffries, Traxys and Lionhead give me reasonable comfort we aren't dealing with fly by night management. These companies have reputations at stake, Traxys in particular. Traxys, who I might add, are on the hook for the P1 supply. I'm also comforted by some of the views given by Julian around the 'sugar hit' approach to signing up with brand names like Tesla, that he will focus on maximising shareholder return rather than providing a steep discount so we can announced we have an offtake with Tesla. Forgive me though I can't remember where he said this.
3. Project economics are still really, really solid at a micro level (IRR 42%, payback under 3 years). and on a macro level, the lithium market is still strong with lithium hydroxide spot still hovering at around twice the long term prices assumed in the updated DFS. Yes global economic conditions appear to be worsening, but there are still big macro drivers pushing decarbonisation in the west - Russia issues prompting rapid disconnection from cheap oil in Europe, climate change etc.
4. Delays are super annoying but there are many stakeholders - Namibian government and community UAE government, US DFC, Australian head office and the ASX/ASIC/Corporations Law compliance, private debt, private equity, battery manufacturers, end users such as VW/GM, offtakers for SOP, caesium, rubidium, silica, input suppliers (eg sulphuric acid). Whack some peripheral crap in, like sourcing hydrogen to lower ESG and licencing deals and there's a bit on. This is a global vertically integrated supply chain being organised by a pre-revenue startup. Predicting a precise timeline is a huge challenge. Is there room for better comms? Sure. Is the road to finance straight? Absolutely not and no reasonable person could expect it to be.
5. We are a new technology that is unproven at commercial scale for sure. However, we are the lowest of low tech new tech. Our 'tech' is just a set of beakers and bunsen burners in a configuration that our metallurgists were first to think of. We are not testing a fusion reactor. We are scaling up a chemistry set that's been proved to work at a smaller scale, an atmospheric pressured, low heat and low process that cooks waste rock into useable rock. Yes there is delivery and commissioning risk, but in the end our 'tech' is just a new way of organising old tech. It's not as high falutin' as it may seem.
6. Our pilot plant produced above battery grade pure lithium carbonate, and hydroxide. And can switch as the market needs. There will be a a premium on our product, albeit, once we go through probably a year of calibration for two reasons - extremely low greenhouse gas emissions (very appealing to a company like VW still smarting from bodging tests) and because extremely high grade material attracts a premium above the spot price.
7. Silence from the company doesn't surprise me. They are in commercial negotiations. There is brinkmanship required. I liked the theory about the ore sales as a gambit to say we don't need cash right away. May not be true, but as someone who works in infrastructure commercial deals, it sounds a very plausible tactic albeit I have no real idea. Suffice to say, in negotiating with financiers, I think showing comfort in delay, pointing to alternative avenues for revenue such as licencing and ore sales is a good way to make the other side question their leverage.
Anyway that is my two cents. The sky could definitely fall in but I am not getting any uneasy feeling yet. If June 30 rolls around without news I may shift but there is a whole 6 weeks of the quarter left until then
(20min delay)