ADV (ASX) Missing drill info

Originally posted by junnnsonggg ↑

Really simple - no demand for the product until now. There has been a fundamental shift in the lithium market unlike the previous decades as fossil fuels reigned.

Now with an increasing climate focus, a green future is becoming more and more urgent with increasing renewable generation. Many European cities are now banning combustion vehicles by the mid 2020s shifting major automakers like BMW and Mercedes to phase out petrol only engines completely as emmission standards becoming increasingly challenging.

Lastly Tesla single handedly started the mainstream EV adoption as it's gigafactory alone will take up all current global production (once fully scaled up) and Elon thinks he will need another one to keep up with global demand for his cars. The French energy minister even offered an old nuclear power site for free for Elon to build his second factory there etc.

Lastly a minor demand addition is the energy storage market however this is often overhyped as the preferred solution is not lithium ion due to cost. Alkalic solution based batteries have significantly better performance both in terms of longevity and cost per kWh of storage. The reason why these aren't preferred for EVs are simply they weigh a lot (which doesn't matter for static storage solutions) which is where the lightness of lithium is a key advantage.

I personally work at one of the major European international oil companies and there is a clear focus and investments being made in the new energies sector (publicly available info). The forward demand curve for lithium is unlike the hype of 2012 (look at the spike in GXY). Even the most conservative estimates by Woodmac point towards a doubling of lithium demand into the next decade with the high case (driven by a more aggressive adoption rate of EVs) pointing to close to triple by 2030.

Hence it's not a matter of if it will be sold, more a question of how much and for what price. When I engaged Brad he was cautious of setting up offtake agreements too soon when I offered commercial advice on structuring pricing terms. He is most concerned about committing to volumes with such high prices as he doesn't want to be short on volume and have to buy product on the ridiculously hot spot market. Hence his current priority is setting the MINIMUM quantity that can be sold without the risk of inability to supply (very costly exercise in a tight market) and setting a price floor and taking advantage of the market imbalance to negotiate best pricing terms once volume risk is mitigated.

Again the volumes over the current 5% of Seymour (don't forget Root Lake and Root Bay) will be used to define the maiden resource to potentially secure funding via offtakes/strategic partnerships (read JV) to minimise dilution, plus 3200+ micron (even bigger than super large jumbo) graphite positions ADV to be the differentiator between other lithium players at the moment. We have a low relative market cap for our level of appraisal with many other smaller players around $15-25m before they have done any drilling.

In summary, don't be afraid to pick up the phone and arrange a meeting with the CEO. Shane, insaf, rusty or any others that may have met with Brad, keep me honest and let me know if you've been told anything different. Last time I met with Brad in the Subiaco office was back in July but it's an indication how early he has been thinking about the potential he sees.

Expand

Happy to say junnnsonggg that BB has been very consistent with me in all discussions , people do have to realize the real push for EVs and power plants is only just beginning as you correctly point out ...demand will outstrip supply in coming years , QUITE HAPPY with every thing going on with ADV at the moment. whilst their are a lot of potential players in the field at the moment I think this may change as some of the players realize the costs to extract LI from deep reserves these will only become viable when demand starts to push higher.
cheers

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(20min delay)
Last 14.5¢		Change -0.005(3.33%)		Mkt cap ! $9.065M

Open	High	Low	Value	Volume
15.0¢	15.0¢	14.5¢	$5.442K	37.53K

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