Proper cashflow analysis

I’ve been running the numbers on PLS cashflow and profit margins over the last week. It started as an activity driven by anxiety but soon turned to soome calmness.

The fact is that HC is an outlet for emotion, not financial analysis

some other facts:
- PLS project cash outflows for the September quarter of $66m - mostly variable costs or capex. They had $66m in the bank at the start of the quarter. This excludes revenue.
- Since then expected sales have fallen. So expected outlays will fall as well. For example, production costs could fall 20m to 30m in the quarter, while revenue should be around $20m base case. They may have $45m in the bank at the end of the quarter. Roughly. PLS would expect a production margin of say 20%.
- there is a stockpile, that in the event of poor sales, could supply 4 to 5 months
- if the plant shuts for a month or two, this will be perceived as negative. The reality is the opposite in light of the stockpiles, provided the grades or mixes available are suitable.
- what is unknown are the accruals to be released this quarter. I guess that sales were already running down in the previous quarter so the impact shouldn’t be too big.
- PLS is spending on capex for both quality and recovery and also stage 2. They must be confident of a recovery soon, or have strong POSCO backing to continue with stage two.
- if raising $60m at a crap price steers the ship through rough waters, while others fall over, it’s a good long term strategy. (If the facts are right)

I haven’t heard any one argue that the battery uptake isn’t happening. Only the speed has changed. To be in that market when it clicks, is important.

Not all lithium stocks are the same. But they are all in the same shite market at the moment. Surviving the next 9 months will pay off handsomely in my opinion.

remember PLS cash is going toward capital and expansion which will be ready later next year. Got to ask yourself why. Hope they’ve read it well

#61