Nolan your post is good in that it warns how low things can go....

Nolan your post is good in that it warns how low things can go. you're correct in that sometimes things can get hairy and quickly.

The examples although are very different from PLS. FMG at the time had $13 billion in debt. AGO was producing very high cost iron ore that also needed to be trucked all the way to port as it did not have its own infrastructure. It also had High debt. An Iron Ore crash caused both of these companies decline. FMG survived because its resource base is gigantic , it had the infrastructure, it got its costs down quickly.

Now looking at PLS today, demand for its product is going to increase on a quarterly basis for the next 30 years as we move through the worlds biggest energy transition since the first Oil well was plugged in the 1860s. PLS has $US $100m in debt, with a DFS cashflow (using prices below today's LiO price and with a higher $AUD than today) EBITDA of over $400m. So looking down on this from a helicopter, PLS could repay its debt in 4 months once its operating. That's 4 months out of a 30 year plus mine life.

Or even this angle? Look at the tea leaves, turn the cup upside down and swish that mess around a bit. Take a look at the Wodgina and Mt Marion transactions. Ken could sell a 5050 JV in Pilgangoora, at market rates evidenced by live transactions. I would say one of the major car companies would be extremely interested to shore up supply in a vertical integration play. Or for that matter, why wouldn't BHP (no lithium), or Royal Dutch Shell (already investing big time in wind and solar as it transitions from "Oil" to "a Energy". Or for that matter all forms of conglomerate industrial companies from Japan, Korea and China.

You see, what PLS has is rare, very rare. And if Ken could sell half the mine for the same value as the Wodgina transaction. We are talking very very big upside from here. like 3 bagger style returns with a massive capital return to investors. Or maybe no capital return and Ken holds onto the cash to buy beaten down smaller cap Lio hard rock plays.

Completely ok with your sky falling in sentiments. it's always worth considering these points it gives everyone some discipline.

thanks for the post.