I just read the most recent Quarterly Activities Report for the first time and it is a remarkable read. LPI/MSB/BRZ have come a long way in such a short period of time. I am very encouraged by the progress at Maricunga - the securing of all key infrastructure needed to support the project, including completion of a 20-year water supply contract and access to existing electricity supply infrastructure to be finalised this quarter. Throw in ownership of the best parcel of off-salar land to site the development works and it is almost 'all systems go'.
However, for me the most important section of the Quarterly Activities Report was, 'Strategic Corporate Activities' which read:
LPI and MSB have received approaches from third-parties during recent months offering project finance, acquisition of equity in the company and/or off-take relationships. It has been the JV’s agreed strategy not to progress with potential off-take partnerships or project financing until the completion of the DFS scheduled for the end of 2018. The advancement of any long-term, strategic relationships is a key 2019.
The outcome of these negotiations is the key to LPI's future as a company. Maricunga is a company-making project and if LPI/MSB management and the Board can optimise the outcome of these negotiations in coming months, then the benefits which will accrue to LPI shareholders will be significant - I have no doubt. Hopefully Codelco's future will be sorted as part of these negotiations - my preferred position is for Codelco to take an equity stake in the project, BUT at a market price. The DFS should help set appropriate commercial terms for any potential buy-in. I see MSB as being a buy-in target, with the possibility that BRZ might also sell, if the price was right. One question to ponder is, will LPI increase its stake in the project? Time will tell.
I think it is time for some posters on this site to start focussing on all the positives attached to the Maricunga project and recognise the very significant progress that has been made in Chile in recent years. LPI shareholders are on the cusp of potential rich rewards. If the PEA project metrics are confirmed or even enhanced in the DFS, the potential financial returns to LPI shareholders are staggering. If all goes to plan, I am hopeful the project's annual output will grow in line with lithium demand and this will be when the Maricunga project will truly 'bring home the bacon' for LPI shareholders. The 2017 WorleyParsons PEA indicated a pre-tax NPV of US$2.033 billion @ 25k BG LCE per annum - wrap your laughing gear around those numbers.
Patience required. Good times ahead. Onwards and upwards. Have a good weekend.
