Post by
nflyby on Jul 09, 2024 10:08am
AGM resume
I apologise for my delay; I was caught up with work.
That been said, here is my resume of this year AGM.
As you will see, it will be very brief as it was the shortest AGM I ever assisted.
Same place and time as every year.
Except this year, there was no one there beside maybe 4 shareholders and people from Raymond James’s firm.
Only JSl was there, no other members of management were present.
As always, the AGM started with the official portion, election of the members of management.
I see and hear a lot of people complaining about management, but without any surprise very few voted against any of them.
All have been elected and JSL has receive more positive votes then most of the years I have been assisting.
Once the formalities were over, no presentation of any kind has been made, JSL immediately opened the floor to question from the shareholders.
Exploration side
As published, Rose 2 (west) is extremely promising, it is twice as big in dept and the minerals are very similar to Rose, but with better purity, with low iron, like with rose, they expect an excellent recuperation rate. Further details will follow throughout the year, but no specific timeline has been given.
The overall land package in that area is looking extremely positive and further exploration / drilling are in the plans, but JSL didn’t want to give a timeline for when it will continue. Until the financial package is completed, management is very careful with the money they have on hand (15 million in bank). They seem to prioritise the financial package instead of a pp if it was needed for drilling.
Financial package
Obviously JSL was not able to say much. He is aware that it is taking time, and we may have the feeling that nothing is happening, but he assured us that it is not the case. They are still working very hard to finalize a deal. Eventually they will be able to share more information. It is a very complex deal, with lots of moving parts to take in consideration. They are looking at the same kind of deal they were last year (roughly 50/50, equity / loan, dept). A financial package that will take care of the entire financial need inside one deal. Even if the market and prices of lithium are down, the parti / parties with who they talk, understand prices can also go up quickly. The negotiations seem to be based on an average price inline with the FS.
We asked more then once, in different ways if the financial deal was delayed because we need to increase the resources and prove Rose 2 first. He was clear that Rose 2 has nothing to do in the present deal. The negotiation is for Rose alone. If the partner / partners want to be part of Rose 2, it will be a separate agreement later. We are not delayed for that reason.
We talked about the government incentives. Right now, the only money given by the government is in form of credit, the money needs to be spent first. More financial help could be in the cads including from the USA side, witch they might be entitle to. But like everything else with the government it takes time. JSL did not went into specific as they don’t control the outcome, neither the certainty. But he did say if they are able to eventually get (for exemple,100-200 millions) financial aid they would be fool not to try to get it as it would have a direct impact on the final money they need to negotiate with the partner /partners.
(JSL did not say this), it is only my interpretation, but to me it sounds as this could be one of the moving parts for which they are waiting for. The Quebec, and Canadian government just seem to need to place other stones before they are ready. Like all the rest, it is taking a lot of time.
JSL didn’t say anything about the potential partner / partners, but he did mention that the lithium will remain in north America, no point of sending it to Europe or elsewhere when so much is needed here. So, I believe we can expect a partner that has ground here or will take ground in the future.
JSL has been asked if he would see Albemarle as an ideal partner. His answer said it all, he and Dr Haber are of the opinion that there is much better one then that.
JSL said they will be ready to put the shovel in the ground by the end of August if the financial package is signed by then. The engineering will be completed to where they need it to move ahead with the construction. As soon as the financial package is officialised any time after August, the building of the mine could start.
We asked JSL if he was concerned about the fact that no concentrator is yet build in North America or even barely in the plan. He said that it will come, it is only a question of time, he is not worried at all.
JSL did not say any specifics, it is only my interpretation. But from all my conversations with management in the past and from all the AGM I attended, I know JSL, ideally, doesn’t want 3 players in the deal but wouldn’t mind two. He also wants a partner that will be there not only to give the money, but who will be working hand in hand with them, from start to finish. They are now on the final discussion with a very few potential players, and they seem extremely confident in the choice they have made.
I see two big companies been associated with them, one more product / mine oriented who will buy the lithium form CRE and take care of the rest including the transformation, and one end user (auto maker probably) two whom the final product will be sell to.
Promotion
This is where I have my biggest grudge with JSL and this management, and I have told JSL many times.
I don’t consider they have done enough when the market was proper for it. I also believe they sold us the idea that some milestones were to happen in a certain time (such as the partner signed very shortly after the permit), and it influenced the decision of many of us regarding our stock. But unfortunately, they have not respected any of their timeline and we are where we are today for that reason.To be down 60-80% from a 4-5 $ stock vs a 2$ makes a difference. To each is own on that subject, I know not everybody on this board share the same opinion on this topic and it is ok. I personally told JSL what I had to say.
To that JSL told me that the reason we were never able to reach the 0.6 to 1.1 of the NPV like other of our peers is because of the mine life of 17 years. But that is about to change.
To do promotion at this time would be a waste of time and money, the market is not in a proper state for it. (I agree with him)
He reminded us that we went through the same thing in 2018, the spodumene prices went down to 800$, the experts were saying that these low prices would last for a decade. Within 1 year and half it was up to 8K$. According to JSL, both him and Dr Haber expect the market to turn around soon and wen it turns around it will happen fast.
JSL mentioned that the market in North America is still very immature, they are years behind China, but it is changing slowly. He is not worried at all for the future of lithium, lots of new mines are needed, there is lots of room and CRE will be one of them.
Once the market turns around, they will be ready to promote properly. They are working on new promotional campaign, with images, videos. We should also expect more then just the promotion with RK (Rockstock chanel).
Once the financial package is signed, and the lithium market recover, we can expect institutions to come into play. Over 60 % of the stock is in the hands of about 10 strong shareholders. The stock could turn around quickly.
( I have heard that many times before…) But let’s see what they do next…
I am so tired to hear the same thing over and over with this management. But it is what it is, may the next lithium run be the right one…
Thank you again for those of you that keep this board alive in these harsh times.
Good luck to everyone.