Folks, I have been posting on PLS for a long time, and, in fact, I was one of the original investors/Director in a private company which effectively "merged" into PLS in either 2013 or early 2014 (sorry too lazy to look up that exact date). There was a serious change of direction for PLS at that time, and as a matter of interest, "we" were actually looking at a number of projects including a gold project in PNG (and quickly discovered how expensive gold exploration up there is, so gave that a miss).
By good fortune and determination to find a decent project, our esteemed MD came upon the Tabba Tabba project, which, of course, is all things tantalum. One thing led to another, and PLS got wind of the Pilgangoora project. GAM (the then owner of Pilgangoora) is a tantalum refiner and their interest is in tantalum supply (not lithium), especially as supply from central Africa has become problematic. I am not entirely sure what then happened, but a deal was done with GAM, and the rest, as they say , is history. GAM's focus is tantalum, as I said, so the lithium prospect was seemingly not of interest to them. I am not privy to exactly what occurred there, and I suspect our intrepid Exploration Director, who knew the area, was intimately involved in securing the tenement. In any event, that deal should go down in the annals of Australian Corporate history, as an absolute blinder.
So, because I was there early, and have blind faith in our great management team, I have been very fortunate to have a large position in PLS. I kept buying for months really off the back of the prospect of a decent tantalum business. I have not sold much at all along the way. And I have certainly not traded. Trading is just not in my DNA. (My preference is to find undervalued companies with great Management and watch them progress)
The point of all this is to lend a bit of credibility to what I am about to "hypothesise".
Along the way, I have continually updated my thinking on where PLS' value might be. I recently changed that view quite considerably, and to the upside. This has previously been discussed on the PLS forum of HC, but I thought as we look forward to the quarterly report in the coming week, it may be useful to reflect for a moment. I think the quarterly will be an excellent summary of where things are at, and especially useful for new investors.
There are a lot of things in PLS' favour, not the least of which is the drive by Elon Musk, which seems to have "turbo-charged" the lithium, electric car and power storage Industrries.
Other very important considerations are the nature of the deposit, the near term cashflow from Tabba Tabba (which some may not realise is the highest grading tantalum deposit on the planet- although it is relatively small), the growing relationships with the big players etc etc. It is almost a faultless set of circumstances. A perfect storm of niceness (as Maxwell Smart would say - lol). (Do not discount the tantalum business in all this. If you add in the Strelley deposit, and the huge tantalum resource from Pilgangoora, I think there is a tantalum business, which in itself supports our current market cap - have a ponder about that one for a moment!!)
I mentioned the other day, on HC, that when I quizzed the MD at the Rising Stars, he said that Pilgangoora is "bloody huge". That really got me thinking. Jumpinjoey, following his site expedition, suggested 100mt to 150mt.
I believe what we have at Pilgangoora is >200mt. Of course, that is yet to be proven. Management cannot write that down in a quarterly report. I can say that on HC, however. I am not a Geo, but I have been in this a long time, and I listen carefully. I may be putting two and two together and arriving at "5", but I doubt it.
That part of my value hypothesis (which, of course, has to incorporate a grade hypothesis and aspects around tantalum credits etc) has changed my thinking over the past few weeks. A few months ago, a dollar per share, seemed a bit far fetched. That was when we were thinking there might be a 60mt resource - maybe. Things have progressed somewhat.
Many have been taking profits, that is obvious, and good luck to them. If a share rises tenfold (or 40- fold from early 2014), then logic would suggest there will be profit taking. I was actually very surprised on the morning of the RRS on the GC to see the share spike to over 30c, then come all the way back to 23.5c. It was an interesting thing to observe. The psychology of the market never ceases to amaze me, and probably why I try not to figure it out or think about it too deeply (and why I am not a trader).
So, here's the other aspect of my value hypothesis, which I touched on above. I think the tantalum business is a potential $50m per annum revenue business for a long time and would support the current market cap. It, however, will co-exist with the lithium business, because that makes total sense. The economies are obvious. There is a lot of focus on lithium in this forum and for good reason. There is a lot of focus on TT, and for good reason, but there is a bigger picture here if trying to assess real value. With the greatest of respect to Beer & Co, I think there could be a tiny bit more focus on the overall tantalum business, and that may well happen as we progress.
If PLS is sitting on a 200mt+ resource at Pilgangoora (and I am talking probably to 250m depth, so that would take time to prove up and will not be done in 12 months), then combine that with the tantalum economics and what have we really got? Also, factor in Greenbushes effectively closing supply (because they want it for their own refineries) to the refiners from 2017.
Mmmh, it's a big number folks, and I think those buying now may well enjoy very nice multiple returns, if patient.
GLTA, and I look forward to perusing the quarterly report in the coming days
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