Ann: Options Underwriting, page-43

Don't know about your last paragraph, but suggest an alternative hypothesis.  The oppies were in the money for a long time noting a lot of option holders likely bought the oppies above 2c a share. 

The missed deadline by management was a major catalyst to the fiasco that unfolded this month IMO.  The root of the problem IMO started with initially promising a PFS mid year, only to get a Scoping Study in Sept and then aligning the PFS to come in just before Option conversion.  The PFS was not different to the SS, and infact when you look at the component parts not much revenue is attributed to byproducts such as cobalt/copper etc (meaning more work required there before DFSI suspect). 

If the PFS was done mid year, AVL could have started negotiations then with potential offtake partners under better economic conditions as well, given the jitters of the market in the now albeit I see that as been temporary btw but trying to find buyers now in this market will take more time IMO (when it comes to Offtakes and even financing so that means discussions are further delayed IMO by a few more months until people realise we are looking simply at a market blip at the moment).

The other key market jitter change IMO was the anticipated production start date shifting out from end 2020 to 2022 over the last year or so, as cemented in the PFS.  Where AVL is at right now is that the production start date also now no longer accords with earlier statements (and what WinWin need which now puts into question that MOU), and a lot of burnt investors which will be wary of AVL.  Based on history, if that production start date is not set in stone (i.e. it is moveable) I would suggest the market based on previous missed deadlines would be saying it would be longer for AVL to get to production than earlier. And that needs to be corrected by getting cracking and meeting the schedules of that deadline.

Whether bad luck or not or simply poor management, you also had  a scenario playing out in November where BTIG was selling heads from recollection sending the price down and buying oppies (which from recollection were always been bought at a discount to the heads price of more than 2c as some other player had too many options from recollection, which was discussed here at the time, giving BTIG an opportunity to play games) because some other player didn't have the funds to convert options.  Then throw in changing market dynamics (i.e. Wall St sell offfs), also SH selling heads to fund oppies and a falling V205 price and investors looking for safe havens and the following chaos emerged. The PFS, and the production date, provided more uncertainty and the building blocks collapsed in Dec as investors left - it was a combination of adverse factors coming together in a short period of time and I suggest each factor on their own wasn't a problem , it was a combination of all the factors together in this jittery market that led to the Dec issues. 

I gave Hokusai some credit here as well that they picked some of this and well done there.  A learning experience for many of us, to apply to any future share purchase btw,  because obviously hindsight is a wonderful thing LOL but such is life.  

Going forward, has FA  possibly changed here as well because another question the market has, I suspect, is whether the delay in AVL going to production means the void can be filled by existing brownfield deposits or more so those companies developing satellite deposits.   Not talking here about whether AVL has a great deposit - it has a great deposit - the question is whether it can get it to market wen the market wants it.   Now, lets look at Bushveld for example, they have Vametco but they still have the Mokopane deposit they can develop as does some of the other producing vanadium players having 'satellite deposits' and I suspect with the money they are getting in now from the high vanadium price they would be accelerating any development of satellite deposits as well IMO and expanding their own producing projects (i.e. financing may not be an issue for them as well given the equity they have built from vanadium sales). 

Throw in the later production date by AVL might mean other players, directly in competition to enter the market with their first producing project,  i.e. termed 'greenfields projects', when combined with brownfields expansions, leads to the question when will the void in the demand supply imbalance be filled and will AVL be in production before then.  I still think AVL will be able to enter the market even in 2022, but uncertainty in that regard is the consequence of a deferred production start date. 

I'll give an example here - in LNG the Gorgon project was first slated for development in the mid 1990s, but as a result of missing a number of windows over various years, this great gas development didn't actually find its way to production until 2017, 20 years after first slated for production because the delay opened up opportunities for other projects to fill the demand/supply imbalance and these imbalances don't appear that often to allow new 'greenfield projects' (i.e. here I am referring to the situation where simply an expansion of a brownfields project doesn't fill the void leaving room for a new greenfields project to emerge).

This article is of interest if want to understand the demand/supply outlook for vanadium and why I think there is still scope for AVL to enter the market in 2022 if that is indeed the set in stone production start up date: https://smallcaps.com.au/china-new-vanadium-steel-rebar-standards/

Greenfields projects such as AVL need to take their opportunities when they present and getting cracking to enter market a must, and not a good start that the production start date has been shifted out due to missed deadlines (some of which AVL had control off, others such as approvals processes are outside AVL's control but submitting the paperwork even in approvals processes is still in AVL's control btw.  Note: because the production date has moved out  some approval processes also cannot commence until the final proposed mine plans are submitted as well, which would also be a concern here if need 'higher level' EPA approvals in WA for this project, but I don't think this project would have the 'highest level' EPA process applying to it which is a very good thing btw so don't think the environmental/final approval processes should take too long here when they workout the mine plan etc)

AVL need to get their act together and restore market confidence here and that will take time, and one way to  'restore' confidence is get a cornerstone Offtake that comes with equity and brings forward the production date.  As I posted last night if the the entity getting the options isn't buying them for someone else (read a future cornerstone offtake participant in AVL) I would be expecting a pump at some stage followed by a dump which will further sap market confidence in AVL in the short term especially if that happens in the next month or two - i.e. that will not be good for market confidence.

Sorting out approvals, doing Met tests is also a key to the DFS and Offtakes, and to be frank when I re-read the PFS I am not happy about some of the items needing to be done to input to a DFS at page 19 to 20  of that doc (such as MET tests and sending samples offshore to end buyers for their own testwork), as these should have been done some time ago as I have posted in the past.

I don't intend to ring management as the Anns themselves give the information of where we are at timeline wise, and my view today is we need to now find another Offtake player because right now I don't see the WinWin MOU amounting to anything as I inferred from my post of last night when matching timelines.

A long post of thought dumps btw, which I hoped would have been shorter as I wrote this without much thinking on structure and went on  a rambling crusade  instead etc etc.

All IMO IMO IMO and need a VB IMO