Well if companies are all operating at a loss, we've found our balance have we not?
Spod falls further, lowest common denominator supplier leaves market. supply reduces, no oversupply, no supply, empty LiOH converters that have just doubled/tripled their capacity... doesn't sound strategically smart.
And by the way, automotive can't get enough batteries.
I think the shorters are now playing with fire. Yes, it could fall some more but (never say never) but you're starting to come up against some hard stops in terms of enterprise value if you broke up the business, an agressive TO of a debt free, cash rich business, ANN regarding capital management, ANN regarding SdV...too risky for me to be honest!
The reality is GXY is ironically in an excellent position being cashed up and debt free.
We're also seeing PLS come down to earth - that was an obvious overpriced asset IMHO. Their production cost is significant...and guess what, their spod quality is down in the 5.8's as well. Also, sounds like there are going to be delays in Stage 2 and more so, Stage 3.
AJM are REALLY struggling, I expect a buyout but I also expect further CR.
At their $600/t (locked in at this low price by previous debt overhangs and raisings), they're likely well underwater when you factor in debt cost.
So if PLS, AJM, GXY all went into Care and Maintenance, that takes a big whopper of the oversupply argument off the table.
For GXY, $300m sitting in the back pocket in a down/distressed-asset market sounds like a great position!
Reckon we'll get to 100,000tpa LCE buy buying out AJM and then developing SdV at 50,000 tpa?
GXY Price at posting:
$1.52 Sentiment: Buy Disclosure: Held
