^ Glad that you have both come to an amicable agreement.
There are some savy investors on this thread including
@Marketwatch123,
@ElonMusk@bdigii,
@Adm1,
@blackeyed and
@McHale. I would love to hear more about the views from the community that lead one to believe that CLQ is pivoting to a North American investment partner...
On the topic of manipulation, the short selling consortium are benefiting from the participation of Australian Super who are likely to be lending a significant proportion of their holding to short sellers. In return, Australian Super are able to benefit from this as they are the recipient of a borrowing fee. Australian Super are no doubt very comfortable with their investment in CLQ and even decided to purchase a further ~10 million units on market at ~32 cents about a month ago. They are also aware that CLQ is in the "orphan period" of the resource stock cycle (i.e. awaiting finance) and thus, while they wait, they can profit from the short selling by lending shares. The short sellers themselves (large institutional banks, which I will not name here) are of course also profiting.
If the mine is successfully financed, it will be at NPV levels, which is ~1.4 billion USD and this is what the market capitalisation of CLQ should subsequently be worth. There is a chance that the NPV of the mine will be even higher than this because the mine has been designed for 3.5 mtpa throughput, whereas the DFS (and permits) have only accounted for 2.5mtpa. This is a 40% potential increase in throughput which will consequently increase the IRR of the project above 20%.
I believe management of CLQ to be excellent and I have full faith in their ability to finance the project. At the 2019 AGM, Sam Riggall stated that "I could sell a 100% offtake tomorrow if I wanted to". However, CLQ are patiently proceeding with negotiations until they can arrive at a deal which values the company at fair value (NPV levels). I do believe there is a fair chance Tesla will be the financing partner. At the 2018 AGM, Robert Friedland stated that "I am in email communication with Elon Musk". Moreover, since then, Sam has stated in a presentation that the Sunrise project is "sizeable enough to supply 100% of the needs of the Tesla Nevada Gigafactory for 40 years". Tesla will make important announcements in H1 2020 at their battery focused investor presentation day next year and ethical pressure on them is mounting.
I think that it is likely that CLQ has decided to pivot away from their original ambitions, which were to partner with a Chinese company. This is perhaps related to the MCC termination decision. This is perhaps because of the Australian Government pursuit of a US partnership on critical raw metals. It may also be because a stronger offer has come through from either Europe or the US. In the most recent Sunrise community newsletter (sent today), Sam Riggal stated that he has just returned from positive offtake discussions abroad. In general, I believe CLQ to be taking the right approach to investor management, which is to under-promise and over-deliver. This is why news flow is perhaps somewhat lacking at times.
If the Sunrise project was not to be financed in 2020 and there is indeed a chance this could happen (due to global macroeconomic situations for example), the mine will effectively be put into care and maintenance and CLQ will await stronger macroeconomic conditions before returning to discussions (i.e. higher cobalt and nickel prices that incentive nickel laterite projects such as CLQ). If this occurrence was to eventuate, I take heart in the fact that the current market capitalisation ($140m at 19 cents) is probably fair value for the CLQ Water Treatment Business alone at this point in time.
Having attended a presentation from the CDO of CLQ, Stephen Grocott, it appeared that his sentiment was that "the challenge was mighty but that it was achievable". At this point in time, the future of many CLQ staff remains uncertain given not all staff can be transferred to CLQ water if the Sunrise project is put on hold.As of the FY2019 Annual Report, the CLQ land holding is worth $7.55m (cost price) and CLQ mining equipment is worth $13.13m (at cost). Total cash on hand is currently approximately $60M. Total property, plant, and equipment is worth $25M. In addition, exploration assets are worth $120M. If needed, Ben Stockdale has stated that CLQ will be able to slow cash-burn such that CLQ can extend out its cash reserves for another 12-18 months without problem. In hindsight, doing a large CR above $1 levels was very savy indeed.
Over the coming years, the CLQ water treatment business could be worth a billion dollars in its own right (take a look at PET for example). I think the market size of the water treatment business is easily large enough for CLQ to sustain revenue of over $100m per annum (in time, once ramped up over the coming years). In an old 2015 presentation, CLQ put a target of $100m p.a. in water treatment revenue. This target has subsequently been removed, but it gives insight into the scale of the potential operations going forward. The GO-membrane is lower cost than traditional PVDF UF membranes and thus is poised to take significant market share, but this will take time.
There is unfortunately, certainly no guarantee that Sunrise will be financed and get off the ground. I believe it will happen, but whether it happens in 2020 or 2025 is another question. However, I remain convinced that we have the best in the business (management and board) on our side with aligned interests (~30% of the company). Regardless, I am also convinced that given current net tangible assets, the strength of the IX technology (purchased from the Russians) and the opportunities in the CLQ Water Business, the current share price (19 cents) is cheap even if the Sunrise project was to never succeed.
I think 2020 will be a tremendous year for the CLQ share price. Good luck to you all. If we are right, we will benefit tremendously over the coming years when CLQ is once more above $1-$2 levels.
Cheers,
(20min delay)