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07/08/20
18:33
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Originally posted by Andyrooo:
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The share price has performed well today. 43c was good. A close above 40c is encouraging. ALB down 6% last night and Livent down over 11%. There were many Lithium commentators surprised by their strong positive performances the night before that. They cited ALB's poor quarterly and poor forecast for Q3CY20. Livent's Brine sourced LiOH can't compete with the Chinese and betting on a USD225m CR, to bide time until prices recover. SQM were green, even though their expansion plans are in tatters. Spodumene replacing Brine as the preferred precursor for LiOH, is disrupting the major miners. Yet overall, the major miners share prices have been increasing in recent months. There has been an ongoing trend with PLS share price movements co-ordinating with GXY. It continues. GXY has had no positive announcements. While the major miners' share prices advance, so do GXY and PLS. PLS's bond refinance was extremely impressive. An interest saving of $A10m pa over the next 2 years. We were also looking at principal repayments of $A8.5m over the next 8 quarters and then another 50% representing the loan balance in 2 years time. That's a staggering cash outflow saving of ~$A88m before the 50% repayment. At 31Mar20 with the 61c exchange rate, the outlook was MUCH worse. If Spod prices don't revert to forecast mean in that 2 years, then I will reconsider my investment. GXY and PLS are the 2 internationally known Oz Lithium plays. A rising tide floats all boats and the international major miners have been doing just that, approaching 52wk highs. 8horse's posts note the impact of Instos setting themselves in GXY and PLS. Are they all getting set for Tesla's Battery Day announcement? Then there's POSCO. Nice of Ken to increase the debt to USD110m and maintain the USD15m facility. We're gonna need $A50m for Stage 2a development and another $A50m to increase the JV participation from 21% to 30%. I would expect that 40ktpa LiOH plant to increase in time as well. Will we share in that expansion too? Or might POSCO can the JV and offer a 60% majority interest in the Pilgangoora Project, an extension of the partnering process we sought in 2019. MIN and WES haven't written back the value of their Lithium investments. Their sales valued Pilgangoora at $A3b plus. The process failed in 2019 because Ken refused unacceptable offers, at a time when Chinese EV sales plummeted. POSCO can become integrated over 3 stages of EV chain if successful. We can finance Stages 2 & 3 and expand our other Lithium and Gold interests. Together with LG Chem and SKI, South Korea can cover all stages. The balls in POSCO's court. What would you do if you were the POSCO CEO? I appreciate no one wants to entertain this outcome, just like an all scrip takeover of AJM. However, to get the Gold you have to slay the Dragon ... and to do that, you have to think laterally. Tesla Battery Day will likely announce the Dry Battery Electrode (DBE) innovation. https://www.youtube.com/watch?v=5zj-7v-Q6Uc Certainly the prospects for Jeff Dahn's patented Lithium Metal/Anode free EV battery are exciting but still in the Lab. He invented the NCM811 EV Battery in 2010. The LM/Anode free battery will likely supercede Solid State before they even come to market. Maybe 2030. NCM811 Batteries will be improved by manufacturers licensing the DBE method.
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What are you suggesting that Posco would target AJM? I certainly think that AJM and PLS should think strategically on the Hydroxide front, equally from a production perspective it looks like both their mines and indeed area will be ground zero for Lithium extraction for decades to come so long as the technology permits demand. Anyone looking at the proximity of both mines, and indeed the vast land and areas owned by both companies would quickly conclude that these companies are worth more as whole than separate entities and assets. Look at the Quebec strategy. The key thing with lithium appears to be consistency of Specification and production of hydroxide and I think this will be the driving force behind consolidation, nevertheless financing in AJM front remains a concern - but I expect we will get this sorted.