Australia's largest stock trading and investment forum Australia's #1 stock forum

AVZ avz minerals limited

0.00%

78.0¢

Running discussion on SP, page-35106

First 35106 Last

Share
Profile

Follow
Obe wan

4,794 Posts.

4709

19/11/20

08:36

Post #: 48977199
Share

Originally posted by treewallaby: ↑

hey mate quickly read thru, thanks

if offtake is not fixed then how on earth can you get finance for $550-600M USD? Period.

it’s too uncertain for financiers, which is why there is now a predicament doing offtake so close to lows in lithium market generally, in my view

I don’t see financiers will accept floating pricing in what is considered to be a high risk jurisdiction, that’s now 2 major areas of risk.

Because of macro political risks I still think it is premature to say the ev revolution is full steam ahead in 2021.

News out of the UK and Europe supports things but policies can quickly change where bigger priorities emerge or a different narrative supplants green energy theme.

Covid was one such narrative. War would be another. But economic crisis would be another again. There is an economic crisis 10 x greater than the GFC coming in my opinion.

Markets are overvalued and when Aust property has actually gone UP in many areas (due to lack of sellers - low interest rates) despite more than a million job losses and despite mortgage freezes and commercial rent freezes and due to all the free money in circulation you know there is going to be an almighty bust soon enough.

Money printing by central banks is at all time highs. Keynesian economics on steroids.

US now entering the most dangerous time for Covid and (winter) lockdowns could occur as vaccines not likely to be widely available.

Either way, at a certain point countries that have printed money will run out of bonds to sell and money to print. Money borrowed now is money that can’t be borrowed later. So that means a major credit squeeze could be coming in the future.

ev revolution depends on a few things:

(1) global cooperation (this has been at risk for some time and risks have intensified in the past 12 months)

(2) consumer appetite (which in my opinion just isn’t there - people would rather pay down personal debt during uncertain times than buy an EV)

(3) profitability (what happens if governments can’t afford to incentivise the EV revolution because all that cash has already been used to address covid and recovering from covid? If governments can’t incentivise it and people can’t afford it (because household debt is very high) then how can the ev revolution even be profitable?)

at the end of the day it is best to think about the economics. Do most Australians drive around in new cars? Or second hand? Do most US denizens drive new cars? Or second hand? If most people can’t afford new cars they certainly can’t afford an EV.

even just think about the PRACTICAL side of things:

Susan shares a 3 bed apartment with 2 others. The apartment has one car space, but the 2 others are required to park on the street. Where / when / how can they recharge their EV?

Tom & Mary throw a big BBQ and invite some of Tom’s work colleagues and their families over. There are 80 in attendance and about 16 cars. If all are EVs, where do they park and how do they charge?

Lisa works at a local cafe on Main Street. Despite her salary of $43,000 pa and exorbitant rent and student loans from that arts degree doubling in music and French literature she was all excited about getting an ev to save the planet. The only problem is she has no charging infrastructure at her 1 bed apartment and there is no where to park her car on Main Street because none of the small commercial landlords have put in ev charging at the back of shops and even then there is no charging on the street. The only place nearby is a single multi-storey ev parking lot (that the locals fought the developer on and lost) but it costs $70 per day, which would be 30% of her pay from the shift. Lisa can go to a servo to recharge but she is tired of having to do this 3 times each week. She is losing 1.5 hours of her week going to the servo to recharge her car. Lisa is staring to think her car is becoming a lot like a bad smartphone that loses its battery before the day is over.

Expand

the only part financers will want fixed is the floor price which will be close to the cost of production / FOB price. : fixing the floor basically protects the financiers cash I.e if the floor ain't fixed then the company runs the risk of going bust....kinda like the stupid CR AVZ did with Pattersons....there was no floor in that CR mechanism and it basically cost the company over half its MC at the point.

Floor is fixed; the rest floats ( likely at a discount ) with LME and the fiancier gets more comfort with that, as the risk of going bust is minimised as the price is at minimum above to cost of production and they may even get paid back earlier, as increased cash with increased revenue tagged to a rising price linked to LME...

PS - your Susan, Tom & Mary, Lisa and the Cafe economic stories were cute. I remember my first economics teacher trying to teach us with those kind of scenarios...brought back memories..thank you....albeit they the Cafe owner one and EV Evolution comparison is a big miss matched....id have been given a ’must try harder’ for that one

Star Wars Guy

AVZ Price at posting: 8.9¢ Sentiment: Buy Disclosure: Held
13 Upvote

0 Great analysis

Reply

Top Stories

Listen: HotCopper Wire Podcast 017 – RBA holds the toppings

TYR

Tyro sinks as RBA floats proposal to scrap EFTPOS surcharges

AII

Inside the depths of Panasqueira: A legacy carved in rock

SYA

Moblan's status as Sayona 'cornerstone' backed by thick, high-grade intercepts

KAL

Kalgoorlie races on to 'largest-ever' RC drill run after doubling Lighthorse strike

First 35106 Last

Add to My Watchlist

What is My Watchlist?

A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.

SPONSORED BY