@GARETH78Have to say that after 3 weeks of contemplating...

@GARETH78


Have to say that after 3 weeks of contemplating everything that’s going on, I see little option other than saying yes to the deal. It doesn’t mean I like the outcome, but it does mean that if I’m being real, there simply isn’t another option.

A no vote would instantly send us back to somewhere around 9 cents (is my rough guess).

We’d be a stranded asset with no real ability to raise working capital other than through large dilution.

We might be able to get an offtake over the line but that would probably only be half the capex required - and we would be left waiting for the macro to run to secure debt funding.

My takeaway is that timing is everything - PLS has found this out in spades as they were ready for the last boom cycle and now have a $1.6bn balance sheet to show for it.

LTR missed the cycle, so did CXO mostly, along with SYA and GL1 and DLI never even got close.

Covid was probably the issue for LRS as without this, we may have made the discovery in 2020 instead of 2022. First production theoretically could have been earlier this year and we may have attracted far larger sums of capital via CR’s to give us the balance sheet necessary to see out the bottom of the cycle.

We are yet to be able to fully judge our board for this decision - this can only truly be done once we see what happens to pricing by early 2025 IMO.

Right now as @ today, the deal looks quite wise - of course this could change if spot prices suddenly rebound way above $1kt but this looks next to impossible for quite a while.

At close today - spot carb closed 70,750 or $9,900/t U.S.

Absolutely insane pricing with almost every single producer of lithium on planet earth now printing losses - yet next to none of them are going into c&m or even cutting back on output.

I had previously expected that spot prices would find a base closer to $1k/t because it didn’t make economic sense for most producers to continue operations below this level.

Unfortunately for me, I didn’t take into account the egos and price of many directors who simply refuse to accept reality.

One final thing is that if prices do rebound at some point in the next 12 months - PLS is easily the most well placed producer to take advantage of this and therefore I’d say the gains for their SP would be significant if prices went back to $1.5k/t for example. They’re already ramped up, big balance sheet and can hit the Go button on Colina construction essentially whenever they feel like it.

Potential for PLS to easily be production more than 1mtpa by end of 2026 (if they want to). I’d also expect their average C1 costs to be sub $500/t while doing so as well = $1k profit per tonne (in this hypothetical).