@triage I concur with these comments and it is supported by what...

@triage

I concur with these comments and it is supported by what I have seen in deal terms with large lithium companies. SQM did a deal with a company I am invested in (ITM) for their lithium deposit in NT - joint venture. Essentially, what they are looking for is deposits greater than 50mt (minimum), over 1% head grade and coarse grain spodumene.

Anything under that will simply not be economical now and into the future (I agree with SQM and views of other lithium industry experts). This is also my own personal view and hence why I still have faith that Winsome is strategically important and will always be worth something to somebody, how much is it worth, only time will tell. I have been loading up recently in the high teens as I see a disconnect between market value and what private equity would pay for our assets, this is based on my own analysis and personal opinion. I am a value investor and only buy at points in time where I believe there is a wide enough disconnect between price and value.

Most lithium deposits regardless of whether they are DFS or WOF processing, generally only produce on average 70% recoveries so anything under the 1% head grade clearly won’t cut the mustard. 50 mt deposit gives you the ability for economies of scale and will allow you to compete in the market, essentially helps spread costs over more tonnage, allowing producers to have the lowest cost per unit as practicably possible for that specific operation. Coarse grain spodumene is easier to process and less capex intensive than fine grain spodumene so it doesn’t surprise me they have narrowed their target metrics.

From here on out I see consolidation in the sector whereby large lithium companies such as Rio Tinto gobble up deposits such as ours. This is a perfect time for majors to invest long term in the lithium space, I always say when the sky is falling down, retail investors seem to flee and follow the herd whereas large corporates are taking a 10-20 year view and are circling companies such as ours on the back of serious share price drops and low market caps relative to future potential. Best time to buy is at the bottom of a commodity cycle regarding pricing, I believe lithium is there at the moment but that is my personal one based on only a handle of large companies turning a profit so in theory we should be close to the bottom or very close to.

Rio is active in the Canadian lithium market (near winsome’s deposit) so I do see them as a suitable partner or buyer. I wouldn’t mind a merger between us and Patriot to form one of the largest lithium companies by deposit in Canada, I would support this and it makes strategic sense for both companies in my personal opinion. We could then sell the whole show to Rio Tinto if we want or try to do it alone as one united company, builds scale and helps reduce overall corporate costs.

A side note and rant so sorry all in advance but China is one of the most successful economies in the world because their investment timelines are forever or 100 year investments where they position themselves strategically to capture the market (look what strangle-hold they have on rare earths supply chain, graphite market and lithiumprocessing), the list goes on regarding commodities they control. They didn’t do this overnight. The western world let them do this over the last 20 plus years so they only have themselves to blame. Whether they can take some market share back remains to be seen and will take years and years to play out.

I have posted many times before on various different investments that China want raw material pricing being low (goldilocks theorem, they don’t want miners making too much money, they don’t want them losing too much money, they want them making just enough money to stay in operation) so they can buy the raw material at just the right price.

I’ve said it time and time again, there is no incentive for China to want raw material prices to increase, it is counterintuitive for them. They want to buy it cheap at the front end and then make all the profits/margin at the back end when the process the raw material and turn it into the end product. You can do this when you control the entire processing supply chain. I don’t trust them at all and they will do anything and everything in their power to manipulate commodity pricing (controlling the supply versus demand equation) so they achieve their goldilocks theorem. We need an independent pricing across all commodities and as far removed as possible from China. I did
apologies in advance for the rant Cheers, CP.