Firstly thanks for the kind thoughts from many posters. I have been away and very busy and mostly without internet connection over the last week, but now I'm back home, and have had a chance to catch up on some reading/thoughts of posters that I missed.
The motives and the price ambition of many posters seem to have changed over time, especially the longer term holders. However I can understand how some people that originally bought at 1c and hold millions of shares could be very interested in taking a 100 bagger, but there are plenty of us that bought much higher for a good reason.
Many bought and hold because we see a lot of value in the company going forward. Instead of concentrating on the what if's on the negative side only, as a reason for a T/O, we should also consider the possible positives going forward. None of us bought in because it is a bluechip company. We all bought knowing there is risk in an early stage company, and by doing so we were not looking for the safety of a bluechip.
Management seem to be getting everything correct recently IMO and I applaud Ken's achievements here. I also believe he can and will take us to a great mining company with the diversification of processing as well. We all know the world is heading towards an EV and grid storage future, with the current forecasts by professional analysts being way off. When they and the large funds realise they need greater exposure to this sector, they will also realise there are not many companies to invest in, and the best of sector will undoubtedly be PLS.
It might take another year and a half to start to get close to real value, but we are talking about a time when we are producing and selling product.
People in the know of where we are heading also know that the potential cashflow for the company is going to be very high, as demand will inevitably go way beyond supply in a few years time. Just thinking about the positives possible for say 5 years time, when we have an expanded plant and a downstream processing plant, plus a continued drilling program from cashflow that shows beyond 200Mt of reserves and I see a cash cow of many years duration.
In 5 years time we could easily be producing a cashflow of $500m/yr if the price was just at today's level, yet I think it will be higher by then.
So far this year we have had 5 European countries starting to make moves towards an EV future, with several outright banning ICE cars from 2025. If you think of this trend continuing over the next few years, we will probably be talking many countries pointing towards EVs as the only choice going forward. Demand will outstrip supply as the batteries will be the road block in production due to lack of QUALITY lithium supplies. Remember I'm thinking the positive future, but it is the way the world is rapidly heading.
Now how much is a company with $500m in cashflow going forward with a 200Mt+ of reserves worth? Remember that even when having a 4Mt/a plant we could still increase supply to 6 or 8Mt/a and still maintain a long mine life.
To me the thought of $1/sh for a takeover IS giving away the farm as we in Australia seem so willing to do. So many of our best assets have been sold to overseas entities for what seemed a good price at the time, but later proved to be a giveaway. The simplest example is Talison (Greenbushes), for $US869m IIRC. How much is that worth now??
The answer is surprisingly easy, as most of Tianqi's profit came from mining Greenbushes. They were valued at $US10B earlier this year, yet only own 51% of Greenbushes, so the total value has gone from $US869m to close to $20B, let's call it $US16B allowing for their other assets.
If we allowed a T/O for $1 then in 5 years time we will probably look at a similar increase in value of our Pilgangoora asset, yet $1 seems good to some now.
When I started the email group, one of the reasons was the games I saw that would be played to downgrade our expectations, and such has occurred over the last couple of months. Deep pockets shorting the company on any good news to lower what the current owners expect to get, and a simple slightly higher price will get many selling.
It is a time honoured practice by the big end of town to take a valuable asset off the current owners, I have seen it happen many many times over my investing years, now numbering 36. Again and again a companies price is kept low before a takeover attempt, and most of the time it works. I set up the email group in an attempt to stop that happening. We are seeing the usual games being played against us, and as our opposition has deep pockets they will keep doing it.
Our advantage is we can just not play. We can support management in making a great company, and say no to any cheap T/O by just holding our shares, and for a change keep the farm in the hands of the mum and dad's unless they offer a ridiculous price, which is unlikely. What's ridiculous? Say $5 at this stage, but $1, NO, GO AWAY!!
PLS Price at posting:
52.0¢ Sentiment: Buy Disclosure: Held
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