Yep,I agree with the basis of your post as well. The only real difference between TMT and AVL IMO is the size of the resource, which would appear to be much bigger for AVL than TMT (and that is what is reflected IMO in the difference between the market cap of AVL versus the market cap of TMT. Based on just looking at MC on the right, AVL's market cap is three times that of TMT and that is probably the result of resource size and some quality issues on grade. It is not about the headline SP number for others, it is about MC.
Given it is the same resource overall, I also wouldn't be surprised if TMT has cobalt/copper and nickel credits, but the fact is it wants to move at lightning pace so I suspect TMT isn't looking at the issue just yet of seeing whether they have those credits in their resource like AVL, and at recoverable rates. I guess to conclusively rule it in out they need to do the assays and drilling to test that but that doesn't appear to be a priority for them.
At the end of the day, it is a question of getting in the market now before increased supply comes onstream and starts reducing the vanadium price. Even our VA is saying longer term he expects the price of vanadium to settle at lower levels to the now. But those entering production now will have the benefit of higher prices and shorter payback periods - from recollection TMT had an average price of $13 per pound in their PFS, but in a NPV it is the first 10 years that determine viability per se (given the impacts of discounting profit streams in financial modelling) so with higher prices the payback period will be shorter and hurdle rates of return will be met despite whether the vanadium price returns to around $10 per pound say from 2027 - 2030 onwards or not. My gut feel is I doubt the vanadium price will get back to lower than $10 per pound anytime soon, but at a complete uneducated guess I would not be expecting the price to get anywhere near there within the next 10 years (but just a pure guess btw). That is the importance of getting yourself into production by 2021/22 because upfront higher price - say $17 per pound then - despite where prices are 10 years after that - say $10 per pound then - are going to significantly benefit a PFS here IMO (given AVL is deemed a low cost producer before we talk cobalt credits etc).
Whilst AVL is doing a more thorough PFS and trying to deal with the cobalt credits in the now as well as better understanding the ore to ensure no nasty surprises when production commences, from a financial viability study perspective the key benefits right now are getting into production ASAP to take advantage of higher prices (just as PLS/KDR/AJM/TAW did in the lithium sector where payback periods are going to be good btw). The issue though becomes the cost of retrofitting capital units to take advantage of your cobalt/copper/nickel credits in future, should TMT have such credits available, and that also is why I think AVL should, whilst still hurrying up, get the process flow sheet correct in the first place. You don't want to be retrofitting later on.
Anyway, enough blabberings on comparisons between TMT and AVL as personally it would appear to me both have different business strategies - TMT is racing to get to production, whilst AVL is racing but wants to get an all encompassing process flow sheet correct in the first place. So TMT's strategy is a bit more riskier as well IMO because if doesn't get that process flow sheet correct it could also have issues later on especially if it doesn't understand the resource correctly for example and therefore doesn't achieve the assumed recovery rates when production starts). At the end of the day I am invested in AVL, rather than TMT, because of the resource size and quality of the resource (compared to TMT - i.e. whilst from the same resource field, in any deposit you have differences in grade and quality in the deposit itself and suspect AVL has the better quality but the quality is still good for TMT btw). I am sure though that TMT is doing teh appropriate testing to reduce risks.
I wish TMT SH all the best, like I do with my own holdings in AVL and to AVL SH, but with different strategies I suspect right now we are not comparing apples with apples. As I said, I wouldn't be discounting that cobalt is not present in the TMT resource area, but they need to assay for it to determine whether they have enough of it to be recoverable (but as I said if recoverable retrofitting a solution for recovery in a process flow sheet would be more expensive than getting the process flow sheet correct in the first place like what I suspect AVL is seeking to do here).
All IMO and I don't intend posting again on resource comparisons between the two. BTW this post is not directed at you, as you would guess, but just a wider post around comparisons and I am not sure why we have been debating such comparisons anyway between us and TMT (and even other vanadium plays). Until production starts any investment IMO is risky so DYOR and pick the stock you like.
GLTAH of vanadium stocks. As I said though I do like AVL hence why I am invested here.
Time for a VB and watch the footy and hope the Dees flog the Eagles and glad the Storm knocked of the Sharks.
All IMO IMO IMO IMO
Expand
(20min delay)
