That's an easy question to answer.
We are an insanely low cost producer. The price right now while not great would not be a major issue for us still taking a very handsome amount of money home each year. When it returns back to the old highs (and likely goes even higher) later in a few years, we will be rolling in cash compared to other companies proportionately.
For many other producers, including a lot of hard rock producers in WA who have very high operating costs and retrieval costs, the suppressed price is a major problem. In a couple cases, that combined with having to service their debt has led to them going under such a A40. At only 300 USD a ton to mine for us, we take a considerable amount more profit and when other mines are being mothballed until the commodity price rises again, we can keep functioning, making money and filling orders as supply creeps up.
We also have a major city only 70 KM's away with workers who want to work, a major port, railway and International Airport, roads right up to the gate of the project and Electrical power lines close buy we can tap into. By sheer geography, we are extremely lucky
We have a significant competitive advantage here.
We also have the advantage of a rather clean product. While the % of our Lithium Spodumene is not super high (its still on the very good side however) our product is quite pure as far as iron content and other things go that need to be chemically sperated and take a lot of effort to do so. Battery manufacturers like this because they can make a much better battery
We have a very low amount of other elements in the mix, which is why we can use gravity seperation rather than all of the expensive and complex steps to process it and ship it off, more or less as is. Other hard rock producers or Lithium salt producers don't have the ease of doing this.
So the Buyer is happy because they have to spend less money processing it at their end, it makes a higher quality product and we are happy because we have to spend much less time and effort into processing the raw product before sending it to the buyer.
Lastly, there is the actual tenement.
We have over 500 square KM to explore and hundreds of pegamite outcrops to explore. Most likely, when we have a bit of money coming in, we will go on an enormous drilling campaign and I expect that our project in the long term could become as big as some of the Monster projects in Western Australia. Plus numerous other tenaments in Gold, Uranium, Copper and likely many other elements which we own that are just sitting there waiting to be developed.
CXO has as a tiny company an extremely bright future and a pretty capable and experienced team of talent behind it. I expect big things from this company.
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