Running discussion on SP, page-2009

When I heard the 360,000 figure branded I note he actually did not specify what it was. (For others go back to the 7 minute mark and have a re-listen to what was actually said). If that number is LCE equivalent, multiply 360,000 tonnes (LCE) by 7.5 tonnes (i.e need 7.5 tonnes of 6% grade spodumene per tonne of lithium carbonate) and this equals 2,700,000 tonnes of spodumene. Assuming the deposit grades 1.5% Li20, meaning 5 tonnes of ore for every tonne of 6% grade spodumene at a 80% recovery, equates to a facility capable of treating 13.5 mtpa of ore.

If the number is 6% spodumene concentrate, which is the more likely scenario here given his comments were around what they might be producing initially, then starup facility is 2 million tonnes per annum, which to be frank is disappointing and certainly IMO if that is what the start up is, which I assume is proposed for 2021, I would want to be taking this to mining hitting 5 mtpa by 2025, then 10 mtpa thereafter. Or at least AVZ better have an idea in their head of when this could be ramped up to a 5mtpa facility, if their preference remains TO instead of taking this to mining because the TO price will not be high if buyers are simply assuming scale and size equivalent to PLS for say the first 5 to 10 years of AVZ's operational profile.

Obviously the issue for AVZ is can the market absorb a level of production anticipation, so need to look at what is conceivable in 2023 - 2030, assuming initial production is for 2021, and that requires a need to look at the overall growth in LCE (take out what will be delivered by the new players AJM, PLS, TAW and anything increase coming from brine and other players don't know off and the rest is AVZ's etc etc). I suspect that the market can certainly accommodate a 5mtpa ore feed facility to 10 mtpa ore feed facility for AVZ by 2025 - 2027, with increases thereafter coming later.

Ultimately scale and size of planned development matter - initial start up, and near side upscale, and not subsequent upramp beyond 2027 - 2030, will determine any TO price here for AVZ if that remains their preference: Post #: 26548026 A key comment in this embedded post was "Another way to say it is if AVZ's resource is 10 times that of PLS it doesn't matter from a valuation sense if the only viable production profile for AVZ is only slightly bigger than PLS's planned production profile." In early January I gave an estimate on TO price at various configerations, and 2 mtpa will not get you a high TO price, infact around 30c a share to be precise at that initial estimation IMO: Refer Post #: 29971739

Since that post I have further refined my thinking of a TO price to no more than 50c to 75c if AVZ do not take this to mining and the outlook is that the market can accommodate start/short term (been 1 - 4 years thereafter) ramp up to 5mtpa - 10 mtpa, assuming the TO is done in the second half of this year only. Refer Post #: 32284345 and Post #: 32156902 I agree in part with some of the comments made by @Gouldians today on a TO price if we do not take this to mining and TO is done this year.

Now, obviously we will maximise our price if we take this to mining and we don't have to look any further to what is happening with the SP of PLS, KDR etc, but noone will pay us that if we don't take this to mining and certainly not if the market cannot accommodate a scale and size of development. Furthermore, economies of scale are central to reducing unit costs for AVZ given the distance to port - refer Post #: 32669218

Like to hear what others think, but I would actually like toknow from managment what conceivable production could come from AVZ in their opinion in the time period 2021 - 2027.

@Rooster I have been harping on about a two mine theory from August/September last year so that is good to see some are also thinking the same. If that is the case, and given the sheer size of AVZ I wouldn't be surprised if separate pits around holes 3 - 6 are developed for tin and tantulum (and niobium credits (or to serve the technical grade market). Refer Post #: 30119771 and Post #: 31669795

IMO based on what I heard in the video AVZ need to take this to mining, but if they support been TO still they better get a handle on what exactly they can be supplying into the market by 2025 to 2027 (what is the configeration) because that is fundamental to extracting the best TO price for SH, if done this year.

All IMO