Progressing but behind expectations

"Current commissioning works have progressed to a semi-continuous operations phase, with planned upcoming works targeting to achieve continuous operations and leading to ramping up production operations during H2-CY2023."

Earlier they led the market to expect that the plant would be fully operational in FY23 but it's slipped. As above, they are not even committing to achieve a rate 2000 tpa in the next 6 months, merely "ramping up". To what?

Total production to date, 17.5 tonnes - about 3 days of nameplate production.

I'm losing patience with this mob. Maybe the technology is harder to scale than they thought?

Still haven't heard anything about an offtake agreement. Are they going to sell it all on the spot market? At least prices have stopped falling.

Link to ann: 05q7rw17cz0vk0.pdf (asx.com.au)

The latest operational update was a bit disappointing. I had been hoping that they would get up to nameplate during FY23Q4 but no, it looks like commissioning is taking longer.

It's great that they've produced 10 tonnes of 99.7% lithium carbonate but really, that's less than 2 days of nameplate production.

I see risk of further delays and a good chance that they don't produce 500 t in the September quarter. Also lithium prices continue to tumble which hits revenue and profit directly.

And I haven't heard anything about an offtake agreement. Are they going to sell it all on the spot market?

I'm really hoping or approval of the expansion which should make the share price pop. No news there either.

Link: Rincon Operational Update (asx.com.au)

2,000tpa operation commissioning and ramp-up phase works progressing, with full ramp-up toward steady-state production operations targeted from end Q2-CY2023

Current production trials produced over 10 tonnes of battery quality lithium carbonate product (average 99.79% purity) from batch operations during commissioning and ramp-up phase works

Carbonate Market:

a quick look at the chart

Lithium Carbonate 99%Min China Spot Chart - Investing.com AU

AGY's share price has crashed over the last two days on no news at all. Even Hot Copper has nothing credible to say except short sellers and BEOT (big end of town) which is a vague conspiracy theory about price manipulation. What's really going on?

The price of lithium carbonate is definitely down and hasn't yet found a floor. AGY has no offtake agreement and are not producing at anywhere near capacity yet. This means that all of their production is exposed to the falling prices.

China is suffering a whole heap of flu - not surprising after the lock-down, so that tends to counter the "China reopening" thesis and sap hope of a short-term lithium recovery.

Lastly, there are still some question marks over AGY. They are a bit light on JORC and their process is unproven at volume. It's better than DLE which is touted by other brine players. AGY seem to be scaling up to commercial production right now.

I'm sticking with my original thesis that they have a good resource, enough cash to commission it, will be cash flow positive in 2023 and have some substantial upside with the possible plant expansion (which is not approved or funded.)

I'm going to be greedy while others are fearful.

This is super annoying. Jerko flat out denied on multiple occasions that they would need to do a capital raise, so I will be extremely disappointed if (and it seems highly likely) they will. Jerko spoke about numerous times that they would secure a partner to develop the expansion. Makes me think they could not secure anyone or agree to terms with interested parties and now looking to shareholders.

AFR is saying an investor roadshow is being organised which suggests a cap raise coming.

https://www.afr.com/street-talk/argosy-minerals-tees-up-fund-manager-chats-raising-tipped-20230116-p5ccur

Could be to fund the +10ktpa expansion. Could be an acquisition. Could be a cost blow-out of the 2ktpa.

We haven't got approval for the expansion and no ann on anything else. If they get expansion approval the SP should rise - massive NPV in that - but I'd like to see the 2k plant finished and operating at nameplate first.

Fun and games. Could present a buying opportunity if you are brave.

Operational Update

Latest update 45kbmbxl0kvrbh.pdf (asx.com.au) is a real "steady as she goes" release. Nothing market sensitive about it.

Have produced 1 tonne of Lithium Carbonate which is not much. will need over 5 tonnes per day to hit 2000 tpa

"Ramp-up phase of continuous lithium carbonate production operations scheduled during current quarter and advancing toward steady-state production operations by end of Q2-CY2023"

Nothing new here. Maintaining my production estimates.

We look forward to achieving many more significant milestones in 2023 as we transform into a cashflow generator, capitalising on lucrative lithium carbonate prices via upcoming product sales revenues, leading to a significant near-term growth phase for the Company.”

Strong cash position, to be boosted by sales at record lithium prices from 2,000tpa production operations Building a team of experienced and proven lithium sector operators in Argentina, combined with key executive appointments in Australia Becoming only the second commercial lithium carbonate producer on ASX Clear growth and development pathway with strong strategic interest to fund 10,000tpa expansion operation

slides:  Investor Presentation - Macquarie WA Forum 29/11/22 08:14

The 2,000tpa lithium carbonate operation construction works in-progress, with first commercial production of battery quality Li2CO3 product targeted during Q4-CY2022;

No Dividend yet,

28/7/22 Cash reserve $36Mill

2924-02546195-6A1101487 (markitdigital.com)

Announcement this morning.

Drilling recommencing at Rincon.

The company has announced 90% total development works are now complete. Company is on track for its target of first production in Q3 CY.

See here

Thanks for a great meeting yesterday with AGY CEO, Jerko Zuvela @Strawman.

My notes and takeaways from the meeting are as follows:-

• Jerko seems like he genuinely wants to create wealth for shareholders and is playing a long game. He isnt worried about short term market sentiment says the company is pursuing its growth strategies regardless
• AGY is not a mining company it is a chemical processing company.
• I felt as though he had a great knowledge of the industry dynamics.
• He thinks reports released recently about oversupply are not realistic. He is still seeing demand, especially from second tier manufacturers. These second tier manufacturers cant get supply because all the larger companies are locking up all the supply. 
• The chemical processing technology is extremely difficult and in the future they may look to license their chemical processing technology to other lithium companies.
• Doesn't want to sell the business. He thinks there is a lot of value creation left and doesn't want to give it away.
• OPEX costs should be under $7500/t. This would be the very upper limit of the costs in the next couple of years.
• He thinks supply side response could take approx. 5 years before supply side will catch up to bring price down meaningfully. When supply catches up to demand he feels prices will stabilize around $20000/t - $25000/t.
• Sort of counterintuitive, but he feels eventually that the price needs to moderate or else people will try and develop tech where lithium isnt needed. At the moment there is no genuine battery tech alternative in the market.
• Getting funding for new lithium is still extremely hard, especially for a company who hasn't produced before. You cant hedge or store materials, so standard mining funding doesnt work. AGY hasnt signed offtake agreements because they want the right longterm partner. who will help with financing the expansion and possibly an equity stake. The partner they go with, will be a long term agreement and mutually beneficial. The right partner will support through cycles.
• Partner agreements may coincide with 10000t/pa regulatory approval and 2000t/pa production commencement. Potentially over the next few months (3-4months). Hoping to have minimal dilution (if any) with the right agreements.
• To take to operations from 2000t/pa to 10000t/pa they estimated in 2018 approx $141m. He thinks it will cost about 25-30% more than that now (~$175m).
• His main hat and focus is AGY. Ragusa and Discovery Alaska are also in the lithium space. He feels his work with AGY is not impacted. Kind of sounded like AGY could possibly take them over in future (or might be reading too much into that)
• He has a team who deals with the Argentinian govt. He is unsure why 10000t/pa hasn't been approved yet, but has had nothing but positive feedback from his team so far. And its actually the provinces who issue permits not the federal govt. He assures the team has a great relationship with the govt and province. The govt wants foreign investment to get these mines running for jobs, royalties and taxes, so no incentive for them to reject.
• Crazy Argentinian inflation rate is a big issue for them because they have to pay for wages and materials in local currency however they cant have the money in local bank accounts with pesos because it gets destroyed with inflation. So its all in Australian banks in AUD and sent on an as required basis. The local equipment they lock it in advance to avoid cost blowouts. Wages and energy is the highest inflationary impact ongoing to AGY. Supply chains have been problematic and getting labor. This has slowed construction. But despite challenges, they should come in under budget.
• They dont do a lot of marketing because they want to maximize putting their money back into the company. He doesnt want to use capital raised funds from investors for that. The money raised from investors they want to use to advance the business for longterm value creation. He feels when the company is in production marketing wont be needed as the operational success is where the longterm value creation is. With operational success it brings credibility. Argosy wants to be known as a company that delivers and is transparent as possible.

Rincon - Initial 2,000 tpa Li2CO3 production From Q3-CY2022

• Release Date: 31/05/22 15:08
• Summary: 2022 AGM Presentation
• Price Sensitive: Yes

Then 90% ownership at 10,000tpa ..Then 12,000tpa

Some slides below:

For the carbon neutral theory:

Interview with CEO Jerko Zuvela

Not much new news but a good introduction and summary of companies strategy

https://www.youtube.com/watch?v=JCj7YpThZJ0&t=574s

Lithium Carbonate at depth of 102.5m to 300m below ground level ..507,000T to 724,000T

see how AGY trades today..