Hi Wary,
Thanks for pointing that out.
I should clarify what I meant by being “already paid for”
before it causes you or anyone else any more conniptions.
I didn’t mean that there were advanced payments.
What I meant is that the cost of "excess" production will already be paid for now in Q2 accounts.
Galaxy’s stockpile for H2 shipments should now be between 45kt and 50kt
(30kt surplus from Q1 and 15-20kt surplus from Q2).
That 45kt will then be effectively “cost free” when it is shipped in H2.
Does that make it clearer?
The rest of your post isn’t really for me, I’m guessing.
I think its more Baby Jesus’ Dept.
He is not available to take your call right now. It’s been a busy month.
Instead - I’ll talk about what happened today at PLS and why it caused some people to get upset. PLS are shutting down for a bit, fixing the plant a bit, then going slow. Their client is starting the same upgrade process that ours started a while back. Experiencing Deja Vous?
So - the market shouts "FIRE" and panics. Their problem is our problem, innit?
In the same way as Roger, the guy down the road, crashed into a lamp post last night and that means I now have to replace my lights in my own uncrashed car.
Doesn't it?
Damn you Roger. Drive more carefully.
They also came clean on a poor $600/ton deal.
So ASB waddles in and says - HAHA GOTCHYAS AGIN. GAXALY LITCHIUm is BAAAD. OK?
The reality is that PLS have a very different kind of contract, based on some formula of different lithium product market prices and spot prices.
Go back and read their announcements about their offtake. Its there somewhere. DYOR.
They haven’t fully explained it all (there are some, but not all 12 secret herbs and spices involved) but it always appeared to me when it was first announced that it would or could get potentially nasty once they returned from the Honey Moon and stopped holding hands.
How? Chinese market/spot prices are fictions. China is not a country its a corporation. Every company is Chinese govt.
Transfer pricing, owning assets that have in-house suppliers. I think it's likely (knowing a bit about their negotiation style) that for the upgrade period they have requested a “special price”. PLS agreed. They can't rock the boat right now. There are problems with the plant. There is the debt to consider. Things can go bad quickly and nobody wants a messy divorce.
The difference between them and GXY can afford to keep production at full throttle even as our competitors are dropping dead in the desert without water.
PLS are not profitable yet, are holding a chunk of debt and don’t have the cash to cover a slow season.
Galaxy contracts are negotiated over traditional noodles and ornamental dragons, followed by hookers
and a nice big game of everybody's favourite - Institutional Collusion.
*just kidding Wary. Just stirring you up.
The difference between PLS and GXY contract meetings is that PLS don’t understand a word when Mr Chang is talking to his lieutenants.
Was it “where is the crispy fried chicken?” or “shall we crispy fry these Aussies for dessert?”.
Anthony Tse is the deal ninja. He speak the local lingo. He extracted top dollar from Tianqi and POSCO.
He orders the local delicacy and the Chinese dudes all nod their heads and say “aah.good choice.”
When they try that “special price” crap on him, he just grabs the whole plate of chicken for himself and says (in Chinese) “we had a deal Chang. No MSG on the chicken. No more messing about after Q2. How about I add a dollop of GST on your wantons?”
Seriously. Today is like we are McDonalds and the Hungry Jacks down the road is shutting down for a while because their baker’s factory burnt down.
Why can’t the market see that a Whopper is not a Big Mac?
Different buns people!! Different Buns!!! Pickles!!! WE have the pickles!!
More seriously. Galaxy have said they have no plans to slow down production.
While you’re at explaining why PLS' problems belong to us.
Can someone explain why PLS is double GXY share price?
Better price, better margin, lower costs, more production, no debt, cash reserves, liquid assets/investments in juniors, 2 more assets in pipeline, no CRs, no directors selling. 2/3 of market cap has cash backing.
Mention LOM and I’ll raise you a SDV project that is likely to still be producing when your grandkids are going senile.
PLS will just be a covered over children’s playground in the desert long before then.
Mention vertical integration and I’ll answer that Galaxy can build 2 converters with the cash it has on hand.
Will the market please stop punishing us for the problems of our competitors.
Galaxy got its YOP deal together at precisely the right time.
Its got a fat wallet from selling SDV North at the right time and we are cruising in style while others are paying debt with CRs.
Will GXY buy a chunk of PLS in its next CR?
This may not be the season for anybody to be dancing in the streets but it does seem a shame
that all you can do is sing the Missing Shipment Blues.
Dem Mean Old Missing Shipment Blues…
beoooww, beeeoww, ba-beeeooww…
