Interview with Jerko Zuvela, Managing Director of Argosy Minerals (ASX:AGY) Argosy Lithium has recently made an acquisition in Nevada USA. We ask why and if this could be a distraction to their core business. We appreciate the mitigation of country risk especially considering recent political and exchange rate turmoil in Argentina.
Jerko gives us an update on the PEA (which they have not updated the numbers for given price drop in the market) and talks to us about their hopes to convert the Mitsubishi relationship from an off-taker to a being a strategic partner. And we discuss the timing of that.
Argosy Lithium has raised AUS$9M in April and have AUD$7.5M at the time of this call. They also tell us about the need to raise an additional AUS$14.3M to finance their interim plant and their hopes to get in to small but economic production. How will retail investors react to this dilution and what precisely does this prove and to what end? What do you think? Leave us a comment.
Their main asset is in the Salta Province in Argentina which is a prolific low cost brine lithium region. Argosy Lithium has a team of chemical processing experts which was a key deciding factor as to why they took up the option to buy the Nevada project. It was a cheap option but possibly a distraction and cost. They need to decide where they are going to spend their time. Jerko says it is low risk, low cost to move it to the next stage. At that point they will decide how to develop this option.
Jerko feels that new entrants don't have chemical processing expertise and will stop new entrants getting in to the market. Morgan Stanley suggest that Argentina, Australia and Chile will contribute to an additional 500,000t of lithium in to the market by 2025 which is twice the current levels. The question then is will demand outstrip supply or will this new tinnage drive the price down. Again Morgan Stanley is suggesting that the price will go to c. UAD$7,300 by 2021 (almost half the current rate).
Argosy Lithium has the usual small company problems in a challenging lithium price market. Lithium is a dirty word in Australia and ASX lithium companies are struggling with liquidity and to raise finance. Argosy is no different. Existing shareholders need to believe it will work but the share price has been dropping for over a year. Management hope that the upcoming milestones and deliverables will make a difference. That is the hope of many companies in the market. That is why we are interested in understanding their business plan, their strategy and who and how they intend to deliver it. Let us know in the comments section whether you think they clear articulated this and if you would invest based on what you heard.
Investors need to make decisions based on cold hard logic. We ask difficult questions so you get answers to be able to make intelligent investment decisions.
We Discuss:
1:40 - Overview of the Company
2:27, 9:55 - Recent Acquisition in Nevada: Why Was it Sold and Why Did They Buy it?
7:48, 29:05 - Why Invest in Argosy Minerals? What Makes Them Unique?
9:00, 19:36 - Company Financials and Cash Position: What's Their Focus?13:00 - Deal with Mitsubishi
16:51, 26:23, 37:46 - Argentina Asset: PEA Reassessment & Jurisdiction Challenges
21:20, 32:52 - The Lithium Market: How Does a Challenged Market Affect Strategy?
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