I've been trying to analyse the information that we received this past week, and the bit that I am having trouble digesting, is MT's reported comment that he wants a quick decision in relation to our mining permit application, and that he has a fall back plan if the answer is No. Really ? do tell, because as WTM pointed out, are we destined to become reindeer farmers ?
Or didn't MT express himself properly and wishes that he could take back what he said. Correct me if I'm wrong, but doesn't the Swedish system allow for an applicant to submit a second or even a third revised application, once the company in question has attempted to deal with the list of reasons why the initial application was denied ? Is this what MT alluded to by saying that we wants to move on ? to what ? move on to addressing the issues that have been raised, before resubmitting our paperwork. Surely it's not a " one strike you're out " process. Perhaps the Lack of Communication Manager Nikki Loff, could address the issue and release something to clarify the confusion.
Another event that I found extremely interesting, was Tesla's admission that they cannot source enough raw materials within the US, and that they have turned to China to fill the void. And please please Uncle Sam, reduce the tariffs because we are on the breadline and can't afford them. In my opinion this revelation from Tesla, is connected to Friday's implosion of Novonix.
But it's what Tesla didn't say that I feel is the important part, that is, the glaring omission of any reference to Europe. If Tesla is struggling to source enough battery materials to supply their US operations, who is going to supply the megafactory that they are constructing in Europe ? And isn't this a huge wake up call for every EV manufacturer and supplier across the globe. I'll bet that the TLG exec team are fielding daily enquiries from anxious global executives, trying organise sufficient future feedstock to support their own projects.
I retain my opinion that LKAB's withdrawal is good for us, as they have a track record of dominating their JV partners, and it's obvious to me they they wanted a bigger slice of the pie. If they want to play hardball with MT, they've picked the wrong bloke, he has 3 decades of experience in dealing with some of the most ruthless people in the industry, the WA mining community. One of the big positives, is that the Swedish people can never say that the Talga Group, didn't give their State owned mining company, the first bite at the cherry.
One of the hurdles that I think MT faced, was that both LKAB and Mitsui were insisting on receiving a piece of pie each, and in LKAB's case, they wanted their slice to encompass the whole shooting match. Which from MT's point of view was never on offer, especially considering that Talga's ever widening range of graphite / graphene products, are destined to produce multiple income streams.
It's obvious that the market in general is concerned about who will fill the void left by the withdrawal of LKAB, and I believe that a potential answer is sitting under our noses. ASX listed Mineral Resources is that company, they make their bread and butter developing, constructing, commissioning, operating and managing mine infrastructure, some of which are done under a Joint Venture basis. There is a lot to be said for Min Res, they don't just have the track record in operating both surface and underground mines, they have the financial strength to back it up. And last but not least, just like one one of our big shareholders Mark Creasy, their CEO and controlling shareholder is Chris Ellison, another boy from Perth. As I've said before, these guys are well known to each other, meeting up at least annually in the Public Bar of the Palace Hotel in Kal. The subject of ramping up the development speed of our projects has been raised before, and one of the things that the WA boys are good at, is getting shit done. For instance, many remote Aust. projects are constrained by Dry / Wet season site accessibility problems, and they are familiar with attempting to achieve 12 months of progress, in 6 months. Which is not unlike the Swedish 6 on 6 off annual winter weather pattern.
I apologise for waffling on a bit, but once I get rolling I can't stop.
I'd like to share my simplistic view on what could happen next. That we engage a suitable company like Mineral Resources to construct the mining infrastructure, and negotiate some type of Joint Venture, to encourage the company in question to operate the mine in a safe and efficient manner.
So in simple terms, we have the mining contractor deliver the feed stock to our factory door, then our in house team handle all of the processing before stacking it up at the back door, where hopefully Mitsui will take care of it from there.
I think it is imperative that we enter in to a JV distribution contract with Mitsui, where they are entitled to clip the ticket for every ton that passes through their hands. I think that Mitsui are rapt that LKAB have withdrawn, and where even as I write, they are attempting to finalise a deal with MT. It is a fact of life that every company needs development capital and I would give my support to issue them 10 per cent of our stock, in order to close a suitable deal, because it's common knowledge that Mitsui like to have substantial skin in the game. And if they want more, say another 10 per cent, then I suggest that they do it the old fashioned way and buy it on market, which would be of obvious benefit to us existing shareholders.
Mitsui would be the perfect partner and we should take some consolation that a company of their standing, thinks that our little company is worthy of their attention. These guys are not venture capitalists looking for a quick return on investment, they have been involved in a number of Aust. projects that are still in operation 50 and 60 years later, which is absolutely perfect for us, because our projects look to be of a multi generational nature as well.
You can't put the cart before the horse, so the appointment of a middleman such as Mitsui is crucial to overall pace of the entire project. Once this deal or JV or whatever is in place, then serious negotiations can begin with a whole plethora of potential off take partners including Northvolt, VW etc, which would de risk their own projects.
The elephant in the room is Tesla. Wouldn't it be of benefit to us if we could tie up a deal to supply their European aspirations and leave the US side to the Chinese. Then I'm sure that a subsequent product performance and economic review of the US / Euro operations, could possibly put us in the box seat to supply their US plants, somewhere down the track. Elon is the ultimate tech geek and he aspires to utilise the most modern technologies available, surely even now he has his Tesla execs closely looking in to what Talga has, and what makes our products unique. Because you have to give the man some credit, he doesn't stop, he is a workaholic and the sky is the limit.
Let's not forget that Tesla enjoys a clear first movers advantage, but for how long ? 12 months ? 18 ? then a whole pile of much much cheaper Electric Vehicles will begin to hit the market. That's when the shorts will move in, because Tesla will begin to face pressure on a number of fronts, notably having to sell their vehicles at a lower retail price, and a world where their market share is being rapidly eroded.
Personally, I don't feel the EV hype, I understand the environmental benefits but the vehicle itself doesn't excite me. Tesla's are nothing more than an over priced golf buggy, albeit one with sleeker styling, bigger wheels and doors and they go a bit faster, but at the end of the day they are the same species. My preferences in cars have a connection with the alcohol I drink. Ice.
The more that I think about the benefits of engaging a specialist construction company slash miner like Min Res, the more I like it. And one of the major reasons why they perform to a tight program, is because all of these bigger companies prefer to use pre qualified sub contractors, especially in construction. They could do the job with a dozen or so direct hires on the ground, with their primary role being to manage the managers. This type of system could also earn us brownie points with the Swedish locals, because all of the actual hands on stuff could be done using local manpower and equipment.
I'll finish with one last suggestion, I think that MT and his advisors would be stupid to even consider a US listing. They are already telling us that they are attempting to secure some EU financing, and given that our project is situated in Sweden, then perhaps a dual listing in Frankfurt would make far more commercial sense, and prove that we are committed to the region.
PDP
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