Sad state of affairs, this is all about survival until the inevitable rebound in prices. AJM need to show that they can be profitable off stage 1 to the extent that they can service the debt. Whether spod prices hold up for that period is out of their hands, but emphasises even more the need to keep production costs contained.
As things stand Ganfeng could choose to really squeeze them but didn’t seem minded to with last years offtakes and loan. The debt holders would be better to not kill the golden goose, but similarly could get into bed with Ganfeng if they thought their ultimate returns were better down that route.
The best defence AJM can muster is to negotiate a good offtake with a non Chinese company to avoid becoming beholden to the Chinese dynamic and their opaque practices.
AJM Price at posting:
9.8¢ Sentiment: Hold Disclosure: Held
