I haven't commented here for a while (except on another thread...

I haven't commented here for a while (except on another thread earlier today), however I have been looking at the comments on an ad-hoc basis. As many have observed, here and on other threads, their is a good deal of nonsense being spoken on multiple sides, but that is as expected. I decided to concentrate on a couple of other stocks to actively trade over the last couple of months because I don't expect GXY to move up much until a few triggers have occurred. For what it's worth I will share my analysis/guestimate of what is happening and those triggers. I have sold no GXY for many months, and in fact re-bought what I sold some months ago. While I think management could have done a better job of "managing" the share price, I also think that in the medium term it probably doesn't matter a whole lot, and the lack of SP management strengthens
their hands when they are finally ready to move.

So...firstly lets establish some context. While I believe in the Li story I am not a believer in AGW as the critical motivater for Li to replace petrol as the predominant energy storage solution for transport, and for those of us who are sceptical of this politicization of science, hammering this issue as the reason why EV's will dominate alienates those who consider themselves more hard-headed or practical. The problem with AGW as the driver is that if it doesn't eventuate the entire justification for EV's in the near future vanishes, and clearly now with China (and to a lesser extent India) now outstripping the entire western world combined in CO2 output, there is clearly not the same level of belief among our major industrial competitors. This matters because scepticism is highest among those of us that have lived a long time, and we are also those with the most money to invest having spent a lifetime accumulating wealth - alienating this group means less small "emotional" capital being available. I am happy to be on the same train as the believers, because I see other more immediate reasons for EV's snowballing to dominance sooner than later, and the political push that comes from the AGW fraternity supports the Li agenda to some extent. Of course the AGW crowd also undermine the agenda by causing electricity costs to climb by eliminating the cheapest power sources - at least in the West. My faith/hunch stems from simpler issues:

1. EV's are much "simpler" as an engineering solution (fewer moving parts) and much lower in maintenance costs.
2. The CO (monoxide) and particulate pollution from ICE's in high density cities is horrendous and is already being implicated in both building degradation and a host of human diseases - and this is the main issue.
3. EV's will eventually by self driving which will transform the life-styles and living choices and government costs of aged care - which will be increasingly important to Western gov's.
4. Li is fully recyclable which means past a certain point new Li will be needed much less.
5. The continuous position tracking that comes with EV's is very attractive to all governments (if not the general populations)
6. It is simpler to set up new population centres if everything uses electricity as its power source than providing the infrastructure for multiple fossil fuels and electricity.
7. If the political will is present it is possible to slice the cost of electricity production, so the current high prices are likely to fall as the population becomes more dependent on only electricity.
8. Self driving cars will make it possible to have fleets of constantly roaming/on demand personal public transport utilising high-density centralised garages/charging stations - allowing the Agenda 21 fans to significantly ratchet up high density living by eliminating personal garages, as for city populations individual car ownership will offer little that on-demand private vehicles public transport does not.
9. Oh...and they fit well with the AGW believers' desire to eliminate fossil fuels.

For these reasons I think national governments will continue to legislate in favour of EV's. Whether governments will continue to support EV's in the near fuiture is THE big risk factor. If you believe governments will continue to force the take-up of EV's then you believe Li demand will grow, if not you don't. Right now too many people are focused on just the AGW story, and if you believe it you believe governments will force the issue regardless of the economy, if you don't then you go cold on EV's and hence Li when the economy sours - as it has in the last 6 months. In part this explains the lack of excitement around Li - we are in a heavy "risk-off" period, and govs world over are look like facing impossible budget pressures very soon.

The second group of reasons the sellers/shorters are able to outstrip the buyers right now is have been well canvassed by others:
1. The functioning mine of the 3 produces spodumene. Essentially spod prices and particularly technical grade Li prices are down compared to 8 months ago. Technical grade demand has not changed but the supply has increased (and because the latter is expensive or impossible to convert to battery grade - depending on the chemistry of the tech grade stuff). Tech grade supply is higher because some new mines could not produce the battery grade yet. While this does not apply to GXY, the average investor does not understand the difference and GXY has not done a good job of explaining or proving the difference in pricing profiles.
2. Bad luck (re timing) meant that GXY hit the end-of-pit-life of their first pit at the same time that the market became aware of lower tech grade pricing, and it looked like the grade of GXY was lowering and extraction costs rising when prices were dropping. This pit cycling will happen every year or two for the mine life, but as it is all new most investors weren't aware of it and did not realise it is a very temporary cyclic condition. The new pit had to then be prepared (overburden removed) and commenced meaning that for a month or two costs are higher than is the case once the new pit is operational.
3. Sensibly, but unfortunate in timing, while prices were lower and the new pit is starting up, GXY chose to take the concentration circuits offline while they implemented an upgrade which then meant production dropped away for a month or two - and costs increased. Ore was still being mined but could not be processed at full rates. The new circuit significantly increases the recovery rate thus improving the profit to be received in coming months - and lowering the per unit cost.
4. The output of Mt C is being sold under 100% fully committed 5 year contracts, at prices GXY does not want their competition to fully realise, so over the last little while they went out of their way to obfuscate the pricing detail- hence they suddenly start looking like they are hiding something (which they are). This is fine in a buoyant market but not so good in a paranoid one as happens when the market turns. This has fed the "risk off" reaction of casual and new investors, reducing share demand until enough quarters have gone by with good mine profits that people relax. Again timing was extremely unfortunate given how the world economy turned.
5. That output is going to multiple purchasers- and some of it is going to highly secret new refinement technologies - which further amplifies the current need for secrecy. Again this feeds the paranoia in a faltering economy - aiding shorting strategies.
6. Even though the reserves of Mt C were increased by 42% during the period through the ongoing drilling programme, the market didn't react because these other factors drowned that factor out.
7. Lastly, GXY, aware of the cyclic performance nature of a producing mine attempted to shift their style of reporting early last year from the quarterly mile-stone based format with detailed accounting of expenditure of a developing mine to a six monthly reporting model where small shifts in production are smoothed over the period. Unfortunately, as they are both a miner and a mine developer - depending on the project, and not yet a very large producer with a multi year production history this was an unwise decision (with the benefit of hind-sight) because it made them look like they were hiding things when they were probably just trying to avoid emotional ups-and-downs in the SP. It induced precisiely the opposite reaction and so they have come back somewhat form this decision.

The next group of reasons relates to SDV.

1. SDV seems to be taking forever - again because little is being disclosed, and the complexities of the dealing in the legal and political framework of Argentina were possibly under estimated.
2. In particular the delay in the registering of the sale for 5% of the area which held up the entire transaction coincided with the most paranoid period of the market. It fed the shorting stories that thedeal had fallen through, when simply the judge was on holidays.
3. The delay on a JV decision has also stressed the market, again because something about it requires secrecy. We know enough from statements to know that this has to do with a new tech they are evaluating. The expectation/suspicion is that this tech will shorten dramatically the entire project timeline. If it is anything like what Posco is spruiking, it is possible that the mine could be operational in a year to a year and half (Posco'c quoted timeline). So now we sit and wait to find out.

The last group of reasons are macro ones, and these explain the over-all economic outlook.

Central to everything is expectations of on=going vehicle demand. The first I covered earlier - gov legislative attitudes - the second is specific to the largest EV market - China:

1. The US-China trade deal is the biggest elephant in the room. If you believe that is going to resolve with a happy agreement, then you believe that the world economy is going to experience a relief rally like we have not seen in many years. I for one believe it is absolutely going to be resolved favourably because China absolutely needs it for internal stability and Trump will need it for the 2020 election. For him he needs it before the economy slows too much from weak international markets, but after the restrictive tariffs have had time to re-establish US industries, and not too early that the upside kick from the rally has petered out before the next election cycle.
2. He needed the China deal to come in after the Mueller investigation completed and absolved him so that it the new flow was not coloured by the ongoing investigation after the deal is announced. So essentially the deal has been slowed until the wrap up of the Mueller investigation - which has now happened.
3. Similar arguments apply to N Korea, but I think that has largely disappeared from the public's focus.
4. Lastly - and for the above reasons - Li spot prices are down and thus all Li producers have suffered, but also for these reasons they are recovering and will continue to do so.

All of these factors explain why GXY is currently a shorter's paradise, and why it will most likely turn sooner than some people expect - and why I decided that their was little point in commenting for the last few months.

Obviously all of the above is my opinion, and if you act on my opinions you are foolish, because I clearly have no idea about that of which I speak.