Another layman's perspectiveI too have been badly beaten down on this stock. Like many of you. Worse than many I would say from a scale perspective. Doesn't make me better. Maybe makes me more stupid.
To the point of lost sleep, churning stomach, intense regret, inability to focus, suspicion that I have completely lost my mind and cannot be trusted with my own money.
But you know what....
Last couple of years when Lithium went completely bonkers and people were paying incredible premiums for shares in companies that had (in some cases anyway) next to no hope of ever being able to pull one tonne of Lithium out of the ground this decade.
Yep, they were riding the Spot market slingshot upward to breathless heights. They were planning to retire early, move to a villa in Italy and leave all the drudgery of their lives behind.
And you know what, if they sold at the top or near, then good for them. Enjoy the Chianti.
But if they were greedy or overly optimistic, and believed that this could only go up and every downstep was just a pause on the way to higher highs... and god forbid the margin calls started for them... well then they were screwed.
They had to burn the furniture to keep warm.
Now with CRE... sure we are at a lowly 62 cents today.
Hard to believe that the 52wk high of 3.03 is on the same screen.
Seems almost incomprehensible.
And when we were at 3.03 and all thought that we were on our way to 4...5...6...10....Italia.
But here we are.
If you got a margin call then that is a damn shame and I am sorry. I know what your pain is like. Felt it myself. Burnt some furniture. Still have a lot of furniture but a lot of smoke damage too.
What has changed?
Sure the market for lithium is in the crapper.
The sentiment of anyone with a soapbox is negative.
Some are truly negative. Some are pushing the negative button hard to buy back cheaper and take advantage of the communal depression festival we are all part of.
Do i believe that CRE has had intense discussions about an offtake and financing of some sort?
Yes I certainly do. Are they still happening? Yes I believe that is the case too.
Should we be shocked that the deal isn't yet done? Well, not really no.
Imagine being at an auction (say, in January 2023) ready to bid on an item that had a fresh permit, a certificate of real authenticity that it could go forward and be a great investment.... and simultaneously watching everyone in the room check their phones and then get up and start leaving.
You may still want the product but you know that the level of urgency is not there anymore. You can wait, push back, redline things on contracts and proposals... push, tweak, grind for a better deal.
Do I know this is happening? No.
If I was part of the buyers negotiating team, I would certainly use it as a bargaining chip. Seriously the level of toxic chatter around the mineral, EVs, supply, China, etc... it is impossible to ignore. Trying to make up for that perceived value collapse of the Spot market would be an insane challenge for anyone trying to sell the "idea" of a Lithium mine. A well planned and late stage idea... but still an idea.
Now CRE has money in the bank thankfully. Enough to weather a pretty good storm like we are in and still be able to advance site prep, long lead ordering, drilling program.
There is a great resource and plenty of potential for more.
Permits... remember the permits in place. They were and are the key piece to the future.
Estimates and valuations based not on ludicrous spot pricing but on more realistic (maybe a little high now arguably) $ per tonne. But there is a great quality resource and it will grow over time with additional drilling that is going to happen in 2024.
There is a strong team at the top. Great geological chops. Great business acumen. When a deal is ready to be done there are the people in the room to make it happen with shareholder value in mind.
There is a great relationship with the people around the Rose site. Indigenous rights and environmental considerations are in place to ensure the best chance of forward momentum when the train starts moving again.
Everyone seems to expect an upturn. Maybe after Chinese New Year. Maybe a quarter out... or two. Maybe they are all full of 5hit. Who knows.
But Lithium will come back.
EVs need Lithium. So do hybrids. So negative EV talk is not great but not the whole story.
Then there is battery storage and the mineral needed there.
So yes. It sucks now.
Yes, we are all walking wounded.
Yes. we wish we would have all sold at 3.03
But, Charlie Munger and Warren Buffet would tell you to buy when there is blood in the streets.
Well, look down. Feel that wetness in your socks....It is not the waves crashing down on the Sardinia coastline. It is the blood. Some of it is probably yours.
Next move is yours.
Apply pressure, Gather more for a transfusion, or Lay down?
Warren would say ignore the wet socks and get some money together to buy more.
Not advice. Just perspective and rambling. I have been on this ride before and have felt the nausea and the euphoria.
DYODD and make your peace with your situation.
HIBL