In part that is my point. If they can only start at 2mtpa but there is capability to ramp up to 5mtpa - 10 mtpa by 2027, because the market can accommodate it but infrastructure constraints don't allow AVZ to expand, then I would prefer they take this to mining (or have a plan saying we will start at 2mptpa and profits will be reinvested into power/roads or we are going to get a JV partner etc etc to increase production throughput). The reason is simple, these constraints which many here I think gloss over at times will impact a TO price if done this year.
So AVZ need a plan been if we don't get the TO price we want then we will take this to mining doing a, b and c ourselves and cya later. Those constraints reduce the TO price because they reduce the development options available, so AVZ need to tell the market what actually is their development plan, i.e. like start at 2mtpa ore feed in 2021, then use profits to do a, b and c to facilitate expansion to 5 mtpa (or build a carbonate facility onsite to maximise SH value etc etc).
Another way to also put it, the market isn't static and if AVZ cannot supply above 360,000 tonnes of 6% grade spodumene by say 2023 - 2025 then that void will get further filled by other hard rock players meaning AVZ's expansion plans are further pushed back etc etc
So what I found missing in the presentation was i.) the plan to production and ramp up, ii.) how to lock out the competitors from the market given Li growth projections and can the market absorb conceivable AVZ growth projections say to 5mtpa - 10 mtpa by 2027 for example, iii.) what other products will be produced by AVZ such as tin, tantulum, niobium, and how given their importance in reducing unit production costs, as the focus in the presentation was chemical grade lithium for the battery market, iv.) will technical grade lithium also be produced, and v.) what is AVZ's overall plan for production to say 2030 and what factors need to be addressed and how. If v.) is left solely in the hands of the Chinese then development scenarios are impacted as well as any future TO price if done this year given the bargaining power in effect has been handed over to the Chinese given they have the capital (i.e. this is a game of bluff as well and AVZ is not playing the game of bluff well because with all the constraints I have mentioned in the past the market IMO remains of the view that AVZ simply wants to be TO.
I found the presentation really a promotional thing and nothing to get excited about as it raised more questions in my mind, as per my previous post and this post. And any prospective buyer in a TO scenario would be thinking 'cheap as chips' and companies like PLS/Greenbushes would be thinking more time to lock up the growth in demand from 2021 - 2025 now etc etc because AVZ have constraints etc etc. AVZ needs to break its own shackles and have a plan B.
What I am saying is the market knows AVZ is big, but they remain unclear how that size and value will be unlocked so that current SH get a higher SP. On this forum we talk about our size compared to PLS and KDR, well PLS, for example, has a plan to production and an expansion plan and existing Offtake Agreements, that is why its price is where it is compared to here. For an explorer with a MC of over $400 million now, what is going to move this SP over the $1 been stated on this forum in the past, yes the drills to June will move it but I dare say no more than to 30c - 35c, meaning a MC of over $650 million, using the HC figures, is a plan to production and expansion. If TO by sya September this year end I doubt a SP north of 50c- 75c (i.e. a50% to 100% premium I am factoring in here) will be achieved IMO, and that will depend on development profile as well.
All IMO
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