Sensational post. Great read. I would like to add one more which I alluded to in my post of today in the chart thread - in the wrong thread by the way - where I stated the following in Post #:
33614851:
"
I think the reason for the mismatch in TA and FA is the flip flop strategy and mixed messages of AVZ sending to market on what the hell they want to do with Manano. It is obvious too me there will be no TO in the next 12 months hence the BOD needs to plan as if it is a miner (and if taken out in the interim so be it) as a against the current mish mash of ideas they seem to be presenting to market and in MLs tweets."
In terms of the bold bit above, traditionally companies who do get taken out at JORC stage occur when results are published and it is the buyer that obviously takes the mine to production (buyer from there does: planning, DFS stage, bankable study, construction, production). However, IMO for AVZ you don't need JORC here to confirm IMO that a bid will not come at the official JORC stage. Given the homogenous nature of the deposit, JORC here is going to be a formality of getting resources into the measured and indicated resource category, which is what you need to start the process of evaluation to see whether mining will occur (that is inferred resources do not get you to mining). And that number is going to be big IMO, we already know that, and I am expecting a measured/indicated resource of 155 mt for 20,000 metres of drilling and double that for 40,000 metre drilling program. The type of deposit here is rare in that amateurs like me or you can do those calcs let alone companies with more experienced resource calculators- if you look at PLS the amount of drills they had to get to a 100 mt indicated/measured resource was very very large, compared to what you need here IMO to get there. The likely upfront AVZ measured/indicated resource numbers are far bigger than any other hard rock lithium mine, despite it been currently the first major drilling program here: Post #:
32752513
But having a measured/indicated resource doesn't mean it stops there, and that where I think a lot of posters haven't made the link that getting to measured/indicatedresource is not the final process. The mining stage (planning/DFS/Bankable study) involves using economic/technical parameters to move that resource to the
proven and probable reserve category which then gives the basis for DFS, bankable and the Final Investment Decision to proceed or not, and obviously if proceed you have a construction and production phase. This is the importance of getting to a measured/indicated resource in the current JORC process, and obviously we can rule out a TO at JORC because we could pretty well get a gauge of JORC now without official confirmation (since there is a lot of resource there). The road been built etc now, all that does is reduce a potential capital cost element in a future feasibility study for AVZ - obviously in a positive manner but ultimately it is the bankable study that determines a mine decision or not.
The lack of buyer interest, and by that I mean a buyer launching a TO bid in the now despite endless tweets and photos, as against been in talks with AVZ, on the way to JORC and IMO probably at JORC, I think is because of two things:
1. Uncertainty around the type of configuration to be pursued here, for example i.) spodumene concentrate or lithium carbonate development or combination of both, ii.) the costs associated with tin and tantulum recovery in a process flow sheet or use a separate process and treat tailings is unknown but a key to increasing viability and iii.) assessing points i.) and ii.) in combination with capital costs, operating costs and addressing bottlenecks against different development scenarios for getting the product to port which contains a cost (i.e. what is the plan for development). Sovereign risk is a factor but the key factor is around process flow configuration and capital and operating cost, which includes the issues around transport costs we endlessly talk about here. refer Post #:
33320699 and Post #:
33325571
2. With so many new producers of spodumene concentrate, also with their own expansion plans, buyers IMO feel they have options available, whether correct or incorrect, to at least 2023 - 2025 so can bide their time. I also feel the market hasn't also really got a handle on the lithium supply to demand gap because I expect lithium demand to grow exponentially as EV become cheaper fostering a new wave of demand. However, AVZ need to take this to mining itself because IMO up until 2025 the existing hard rock plays and other new emerging players (and even brine if they can sort out its impurity issues to get into the growing lithium hydroxide market - see posts below: Post #:
25812318 and Post #:
25816692 -) will seek to fill the gap, and some are already talking expansion plans like PLS and Greenbushes for example
My view on the AVZ role in the lithium story is around the supply it brings to quickening the process of matching supply and demand, and therefore bringing forward the exponential growth rate in lithium demand by bringing its supply to market. In effect AVZ will allow IMO a quicker supply/demand redress, but if it doesn't come into production by 2021/22 then the fill to at least 2025 will be from some of the new and existing producers IMO. AVZ need to make its own luck and get to market early - size doesn't matter if the production start up is low is my point, and infact project economics is impacted if it cannot start at an appropriate scale. Post #:
26548026
The graph below explains better what I am seeking to say, so AVZ has to make its own luck in this game by moving to mining. Waiting for a TO bid will not provide value to SH, and infact will detract from that value because the market is clearly not pricing in a TO at the pre JORC or after JORC stage, i.e. prior to the mine planning/DFS stage IMO. So AVZ have to move this now to the mine/planning DFS and then FID stage (and any member of the BOD not interested in that needs to go). Klaus dumping has not helped one iota in the market thinking AVZ is not interested in taking this to mining and they were free shares as well - also delays in JORC have not helped either but the SP price action IMO also reflects that the market and speculators in particular have priced in no takeover for the next 12 months IMO and that AVZ need to take this to mining. Maybe when AVZ starts talking to prospective players around Offtake Agreements/equity agreements and preliminary studies etc etc that might be the next point in the value chain the market might start pricing in a potential TO scenario but that won't happen until IMO early to mid next year.
AVZ IMO need to get cracking by finalising drilling, establish JORC and start heading towards DFS/bankable study, which I suspect won't be completed (i.e. the latter) until the second half of 2019. Add one to two years for the final tweaking stage/construction and mining is possible here in 2021/22 IMO, 2020/21 if they get cracking now. I think the market is probably pricing in a mining commencement date of 2023 - 2025 IMO because of just how long things are taking by AVZ, but IMO that is because AVZ have been under the TO us scenario please as against we are miners.
To understand my comments on proven and probable reserves (and how they differ from measured and indicated resources - initial JORC) the below graph may help others out.After JORC is established your studies are around moving that resource to the proven and probable reserve category which DFS and then bankable studies are based upon and then mining decisions are made.
All IMO IMO IMO IMO IMO and IMO after drinking a great beer IMO which is VB
