Running discussion on SP, page-35103

You realise that it takes a few years to get to production, so the key is the price you get at production and what that price is expected to be, not what the price is today, but the price today might be indicative of demand/supply conditions themselves and how they might transpire in outyears (i.e. when will demand > supply is teh point here).

What most people will do is sign contracts linking prices to a market index. That is what AJM did with a floor and ceiling price approach in its contracts with between that floor/ceiling linked to movements in 'lithium chemical prices specifically from recollect the lithium carbonate price', but the floor wasn't honoured in those contractsby teh Chinese, and the price effectively became linked to the index itself (been a % of the lithium carbonate price from recollection). PLS prices are linked to the carbonate index price as well - so you might want to have a look at that more generally been understanding contractual terms and pricing. Going forward I suspect prices for AVZ and other hard rock producers that can produce decent grade spodumene will be linked to lithium hydroxide prices. Sulphate prices would also be reflective of movements in lith chemical prices as well IMO

Small players like PLL might accept a fixed price to avoid commodity price risk, i.e. and note that PLL price I calculated at US$550 per tonne, refer Post #: 47799612, but i suspect prices derived by AVZ in contracts will be linked to an index of 'lithium chemicals' to get the upside of supply shortages and how that might impact prices received, given the average price in the AVZ DFS is US$673.70 per tonne (for 6% grade spodumene). And in case you feel like a debate, understand MLL has a similar price and LTR a higher price for 6% grade spodumene in its feasibility study (so maybe consider spreading the posting love around). We can rabbit on sulphate prices etc etc and hydroxide prices as well etc etc but anyone linking contracts to index's will get the prices at that point in production time and increased prices is what will bring AVZ into production because it will be a market reflection that supply < demand and new greenfield entrants are required - point is I doubt very much AVZ will enter a fixed price contract btw is my point.

For everyone's sake lets hope Europe/USA establishes a decent lithium chemicals industry so that China's dominance of the lithium chemicals market is reduced as well.

No different to LNG prices which are linked to oil prices, and iron ore prices which are linked to Platts index's. Seriously it is why they call it commodity price risk - linking prices to index's in your contracts means in the good years you get great prices and in the bad years you get crap prices. If you want a fixed price you get the PLL price which is still above todays 6% grade spodumene prices, btw as a point of reference btw for you but PLL doesn't get any further upside either btw. The question is what will prices be when AVZ get into production - read what will the index pricing show (i.e. prices been linked to movements inlithium chemical prices) because I expects contracts will be linked to indexes is my point, been prices received say for spodumene will be linked to movements in 'lithium chemical prices'.

Anyway, my view on AVZ remains as per my last two posts on AVZ - it is all about demand, and that is the risk here. I don't intend posting from here on that much because too many aliases on HC these days across many forums IMO and it is why I don't reply to some posts when tagged into them by such posters either. Also until demand improves, which is the basis for Offtakes and funding, not much to really discuss IMO
Post #: 48705846
Post #: 48706332

And finally, in terms of SP if Offtakes are signed, funding is secured etc no dithering by AVZ, the SP will do this IMO IMO Because those facets come with demand growth - it is demand growth that opens up opportunities for Offtakes/fundng and FA to finally link with TA. You can't open up a mine without demand growth and a supply shortage is my point, regardless of how good the resource is is my point. Right now, anyone interested in the SP IMO is simply a trader/short term holder IMO IMO etc etc because we are still waiting for the demand growth to clear the supply overhang. For uneducated longs like me when it come to charting this is what we hope for LOL



Those that can free carry, or can partially free carry, may need to consider strategy for the next uptick to say 10c - 12c, i.e. if that is what happens, just in case SP goes back down again but what will be will be etc etc. It is all about demand.

As for capex. be mindful it can be staged. Understand the spodumene circuit and capex cost there before adding the sulphate plant. Capex can be staged is the point, and if so concerned maybe go over to LTR and ask them how they intend funding their hydroxide/spodumene project (again read capex can be staged). My view is the DFS provides options for staged development are there as well, given the initial DFS 4.5 mtpa produces 700,000 tpa of spodumene production (stage 1), with then 150,000 tpa used to produce 45,000 tpa of sulphate production (stage 2). Meaning once sulphate production starts you would be exporting 550,000 tpa of spodumene concentrate and 45,000 tpa of sulphate (stage 2 in totality), assuming no expansion scenarios (but I see expansions as well as per below). Now people need to understand the capex spend of the stages - the way some of the debate is been presented here is on day 1 AVZ will be producing sulphate (that is not the case meaning it doesn't need the US$550 million capex been floated about on day 1 by some, but will need it for the sulphate stage. How that capex is funded will determine dillution as well, but in production well SP will look after itself because SP becomes a function of actual and forecast EPS and P/E ratios.

For those wanting to understand why sulphate production, I posted this in LTR. Sulphate opens up your options for supplying hydroxide producers (NCA/NCM batteries) and in future carbonate producers (solid state batteries) IMO IMO IMO, but doesn't attain the prices of hydroxide but also has a lower capex spend too. Refer half way down - Post #: 48294995

Anyway, given what has happened on my investment in ADN, I will probably destroy my mind drinking Yarra Red (nah will always enjoy VB like the VB I am drinking now hving upgraded to longnecks) by the next time I post on here.

The key though is if AVZ does get to production with a 4mtpa plant, it will be able to expand production capability in future at a lower cost. This statement is to you @Kikker1959 for that other comment you made in LTR, but suspect your comment might reflect the fact the expansion capability of LTR is reduced itself given it will be an underground mine unless it can find more open cut resource but LTR will get too mining is my point btw and I personally don't think AVZ holders see LTR as a competitor btw (i.e. I don't btw) - Your Post here that I am replying to on the AVZ thread #: 48925184. At the end of the day, the scale you get into production, like LTR, is based on what the market can take at production date. But if your resource is large you can expand just like Greenbushes has done over the last 20 years far more so through open cut methods, and it is how iron ore production has expanded since the 1960s. Nothing stays statics is my point - you get to production under one configuration, but overtime that configuration changes which through expansions leads to more economies of scale, where possible.

The risks for longs with AVZ is it doesn't get to production, but the reward for longs is if gets to production then the fruits are there to be enjoyed for long term holders (and obviously those who free carry along the journey simply have risk free benefits from the point they free carry to production date, albeit there is always an opportunity cost holding a spekky because you think I should have invested here or there in the interim etc etc). But everyone has a differing risk reward profile - up to how people want to invest.

And Tree, I see you as a trader/short termer as you are always looking at the ups and downs in SP to get a short term entry and exit IMO IMO - your call, your choice but frankly I haven't seen you post anything on the lithium market and your views of where it will be in 1 year, 2 years, 5 years and 10 years time. It is why I haven't engaged with you of late - we have different time outlooks.

All IMO IMO and time for another longneck