RE:I expect a bounce to 40-45 cents this weekTK, I hope you'll ultimately be proven correct..
That $325mil cash is dead in their hands currently - they've got interest accruing on their undrawn bonds at 11% - a fast ticking shot clock, much of a delay puts them out of the money.
I expect any rebound to be tempered until Q4 at best. Management really hurt their credibility this month and dilution is unknown at present. File this case under the old adage of: "It doesn't matter how many resources you have, if you don't know how to use them, they will never be enough."
This current "cost to complete assessment" isn't even based upon an independent engineers assessment as per the bond terms.
I don't understand why indirect labour costs during mine operation and cost to blast/expose mineral would be included in price increase.. Those would be considered increases in operating the asset but not in a "cost to complete/capex" assessment? Anyone with more knowledge in accounting in this area? I look forward to reading this independent's engineering report/assessment.
Just some important notes on your claims:
- Nemaska is not advantageously located for the current lithium supply chain. They do not have the option to export their conc. spodumene economically. Their bond conditions are forcing their hand, in an attempt to further de-risk the bond holdings. Hopefully a cheap lesson that bond holders and share holders interests are not always aligned.
- NMX are not in good standing with the FMC or JMBM agreements, and management has no intention of making good on their current JMBM agreement per page 40 of the "Dec 2018" MD&A. They'll owe at least $12 million back, finding someone to take over replacement agreement would be difficult because...
- Their P1P is only producing 4.5 tonne a year of Lithium monohydrate at current run rate in January. (Approx. $54,000 worth of product at market price)
- FMC and LMBM are pretty much in control of the situation.
- They'll be using some of that cash to plug to the FMC contract LiCO hole ($20 million) with the breakfee included.
- Bond interest.. need I say more. $30 million owed on the undrawn senior bonds already. $100million outstanding owed to Orion if their agreement goes south.
- Non-producing minerals are not worth as much as you've claimed.
I wish us all good luck in the next two weeks, as well as Guy and the Management team.. Dumb and Dumber (the movie) said it best "So you're saying there's a chance."
