Here is some food for thought...
A couple of scenarios:
1/
A year or so ago, we do a JV for SDV, giving up say 75% for $500m, and get stuck straight into development of a 25ktpa operation. Plenty of cash, get stuck straight in.
700ha of ponds @ $100m, etc.
Punters saying "great, we are finally underway!" 2.5 year build, commissioning then production in 2022... Yay!
Forever onwards, we hand over 75% of the profits to "our saviour" that appeared from the murky depths of the Lithium lull to "help us out".
2/
A year or so ago, we realise that the lull is extending and we really do not need to settle for a substandard JV deal. Potential partners are leaning on "current prices" for their projections and we don't think this is reasonable. We know what this asset is worth and the current defined reserve is not all that's there... Better to take a bit longer and retain more ownership for the multiple decades of revenue sharing.
We secure a bunch of cash from POSCO and set about determining how we can best use this in a modular and scalable development, giving us time and allowing us to progress towards further de-risking and a better negotiating position sometime probably around late 2021 for a JV for the later stages.
Some say management is crap or has failed because we "haven't progressed SDV" (even though what they really mean is that we haven't got all the funding together yet and pulled the trigger on a final project build out).
Some say if management were any good, then they would have been able to put together a great deal already anyway (like we have a say in macro factors, others' crappy offers leaning on "EV infancy + Li lull" pricing, or the length of time the last mini-boom lasted?)..
Some others say..... yep times are currently sh!t, good thing we don't give up more than we need to of our prized asset, and seeing that we have 7-figures of greenbacks on their way, we rightly should push ahead as efficiently and effectively as possible, until times aren't so sh!t again. We don't need a sh!tty deal right now. It might take a bit longer, sure, but is that wait more than offset by a JV at say 50% (or significantly less) instead, thereby providing DOUBLE (or more) the profits to us over the lifetime of the operation?!?! Let's wait til times aren't so sh!t again, then we will see what sort of a deal we can put together. By then, we'll have invested a solid 7 figures and more years of development work in this project, will likely have more understanding of its expansion potential, and will be negotiating from a position of strength in a market that is increasingly desperate to secure quality chemical product.
I know which scenario I prefer and which group I'm in.
I am surprised that it at least appears as though some here would be happy with scenario 1... I suspect that is the short-termers, looking for a price bump for their trade, in contrast to the long-termers who want ongoing maximum value and returns from our assets and projects.
Anyway, just some thoughts to ponder... or not.
16% in 3 days seems to have lifted the mood somewhat. Funny that. Nothing's changed!
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