Advantage Lithium Corp AVLIF

RE:Argentina/Orocobre

[Coffeeinvesting]

The direct impact is that Orocobre’s free cash flow will be decreased, which may give less incentive to contribute to the ALL project as cash might be a bit tighter. On the other side of it though, is that the peso has decreased so much that the 8% tax is actually not much change when factoring the currency devaluation. Foreign companies operating in Argentina have been getting away with lower costs because they pay their employees in peso, but sell lithium at a U.S$.

The in-direct impact is that potential acquirers of AAL might see Argentina’s negative economic condition and not like this 8% tax, i.e. more risk. That said, the 8% tax is only until 2020 and AAL, or any purchaser of AAL, would not be receiving cashflows from operations until post 2020, where the tax temporary tax will drop (hopefully).

For me, I have been incrementally increasing my position. It’s a proven basin, with a proven partner, with a resource upgrade coming down the pipe.

Right now there is negative sentiment, and I believe a misunderstanding of the supply/demand condition, along with the Chinese lithium spot price having an impact. However, the lithium story will definitely change down the line, and this might be another extremely hot sector.
This is investing, buy low sell high.

GL