Thanks Sallywoofs for your analysis. As always your recent posts are well-research and much appreciated. I'd just like to contribute a few ideas about ARL's share price. (Not in any particular order of importance.)
1) The current low prices is severely affected by investors looking for really quick profits. As soon as they hear of a payback period of 3 or 5 years they bail out and look for 10 baggers elsewhere. Also, PFSs seem to be a signal that the share price will not benefit from any further exploration news, so investors look for greener pastures. (This viewpoint may miss a company's really big discovery, and big price rise.)
2) Trump's trade war has many investors getting nervous and they are moving to the sidelines until it's safe to go back in the water. I think a new round of counter punches will happen later this week so, under these circumstances, battery-metal small caps are not safe enough for big investors. (Battery-metals are usually bottom of the list for brokers at the best of time - but who uses a broker anymore.)
3) I think shareholders need to declare when they hold 10% of a company (others will have better info than me), and I don't recall seeing Chinese moving a lot of capital into ARL (as yet). For example, today's close was 80 cents with a volume of only 143,000. Yes, there are some other battery-metal companies which have JVs with Chinese companies, but its clear cut and posters on Hot Copper know about it. So I don't think we can blame the Chinese for fluctuations in ARL's price. In fact some may welcome a declaration of a JV. (I would like to see Aussie super funds get more proactive in battery-metals.)
4) Many investors have unrealistic expectations about mining and processing of cobalt. If it was easy and cheap, well guess what, it would be done and dusted already. The fact is, whether it is laterite or sulfide, the concentration of cobalt in an ore body is only 0.1%, even if the company is lucky. As a result, companies like ARL need to process a mountain of rock (or a huge pit) in order to meet targets of 3,000 tons per annum for 20 years life-of-mine. Yes sulfide mineralised deposits have higher grades of cobalt in veins within host rock. But the average grade is still only about 0.1% or so. Unless the deposit is extra special, the cobalt is a minor component which provides credits to the nickel or copper mine.
5) The extraction of pure cobalt sulfate is difficult and expensive. If an output of 3,000 ton per annum is required, the capex must be very large for any type of cobalt deposit. It's not like mining iron ore by BHP-style (i.e, blast, excavate, transport to port, collect the cash). Cobalt sulfate requires big investment in chemical manufacturing processes and a 2-year construction phase, which is something Aussie companies and shareholders are not very familiar with. Once we can produce pure cobalt sulfate, the opportunity of rechargeable battery manufacture is a possibility (CLQ has talked about it but I don't think ARL, COB or CLQ included it in their recent announcements).
6) Finally, I think the recent posts here are revealing that ARL is in the top tier of Aussie cobalt companies (but I wouldn't want to write-off any battery-metal explorer because a new discovery by any one of the small caps could be just around the corner). ARL is a longterm investment (i.e., sometime in the next 1 to 5 years it will 10 bag). When ARL is starting to produce (maybe 2021) the worldwide squeeze on cobalt supply will be at the point of becoming accute, then the real game begins. We are in the preseason trial-games at the moment.
Good luck amegos.
ARL Price at posting:
80.0¢ Sentiment: Buy Disclosure: Held
(20min delay)