Member Info for Carcosa61

Are those £5+ analyst share price targets at time of farm out announcement or first commercial oil revenues or something else?

Thanks for the suggestion Hermit. It lead me to the original report at https://www.goldmansachs.com/insights/pages/gs-research/battery-metals-watch-the-end-of-the-beginning/report.pdf

Broadly speaking it appears to be largely based upon China producing Lithium at a faster rate than the then consensus view.

Although early days it does seem to be that Goldman Sachs have broadly got the price right to date https://tradingeconomics.com/commodity/lithium shows a 20% price decline since the highs, although things can quickly change as a result of many global events.

Goldman Sachs forecast Lithium/Spodumene prices are:

Lithium carbonate
2023 US$53,300
2024 US$11,000
2025 US$11,000

Lithium hydroxide
2023 US$58,015
2024 US$12,500
2025 US$12,500

Spodumene 6%
2022 US$4,233
2023 US$4,330
2024 US$800
2025 US$800

Exceprt from https://www.fool.com.au/2022/12/08/heres-the-lithium-price-forecast-through-to-2025/

The latest timings and production schedule I used were from the GM/LA presentation and also cross referenced to the January 31/23 press release "LITHIUM AMERICAS PROVIDES GENERAL MOTORS TRANSACTION DETAILS AND UPDATE ON CONSTRUCTION PLAN FOR THACKER PASS" (sorry for the all Caps).

The advancement is perhaps more associated with the spinning off of Thacker Pass as a separate company(?)

Am sure they would like to bring it forward but given all the permitting hurdles they have already gone through I think it would be very difficult to commence Phase 2 any earlier than planned.

Originally, in 2018, Phase 1 and 2 was for 30,000 tonnes each with an anticipated production date of Q4/2022 and Q3/2026 respectively.

Subsequently the targeted tonnage levels were increased in 2021 following larger resource estimates (by lowering the cut-off grade) and the increased tonnage for Phase 2 would take longer to achieve due permitting plus increased capacity arising from efficiency gains.

Compared to the initial timescales things obviously took longer than anticipated and now we have first production slated for Phase 1 and 2 being H2/2026 and H1/2030 with each phase contributing a boiler plate 40,000 tonnes.

The production profile is Year 1, 20k tonnes, Years 2 & 3, 38,000k and not getting to full capacity of ~70k tonnes until year 5, meaning it will not be until 2035 before Trident starts to see the real money coming in (although as the recent TRR presentation stressed it is the NAV that drives the share price).

The above timescales/production depends on the claimed recovery efficiencies being realised and construction is completed on time. Neither of which are far from certain. Then there is also the question of how lithium price and how that may change over the next 12 years.

Thanks TheTrotsy

I note that 2023 three way hedges are:
Sold puts $2:14
Purchased Puts $2.82
Sold Calls $3.59

Which for the moment seems good if gas prices remain >$2.14 (?)

Whilst hedged it may not mean massive profits because of the very large commodity price declines. According to DEC's AR's they do have three way collar hedges which can become a problem as discussed here: https://www.reuters.com/business/energy/us-gas-producers-skimped-price-hedges-now-face-reckoning-2023-02-14/

FYI I have been a shareholder since 2021.

Royalties are due production sales, How can it be anything else? It is common however to sell the Royalty as TRR have done in the recent past.

Am only talking about about Thacker Pass as it pertains to TRR. See LAC presentations for the production ramp up over the coming years. It starts according to the plan in H2 2026 but full Phase 2 production not expected for many years after that.

"The price used was $66k per ton, below its previous high of $88k."
Yes, which is significantly higher that if you look at Lithium prices today.

It is normal practice for offtake agreements to be below spot price; often 5-7% below. That is not illegal because amongst other things the deal has to be 'equitable'. LA are being compensated by having a guaranteed buyer at a set conversion price and quantity; even if for some reason GM don't need the quantity produced (say for example due industrial action).

This is all pretty standard stuff. Maybe you are not as smart as your name implies. Maybe use Dunning-Kruger instead.

They won't start getting the $55m until 2033. That's ten years away. Also theat $55m figure was based on a much higher LCE price than is current and following the GM deal realised pricing will be below spot price anyway.

That's why the NPV value is so important to the company. They now have a ~$150m asset for which they paid $28m for post buyback gaining them a significant IRR within two years or acquiring the asset. Plus they get the buyback in cash.

It therefore makes sense to dispose of all or part of the asset sooner rather than later and recycle the cash into something else to provide the sort of IRR they seek. This will also solve a risk of LCE prices - and hence NPV - crashing as as happened in recent weeks.

This will free up significant cash to recycle into new business to generate further IRR superior to that which can be now obtained from the royalty arising from a $150m asset.

Here is a better report
hTTps://seekingalpha.com/news/3932659-judge-mainly-affirms-federal-permit-for-thacker-pass-lithium-mine-in-nevada

"U.S. district judge in Nevada largely upheld the federal government's decision to approve the Thacker Pass lithium mine after challenges from environmental and other groups.

Judge Miranda Ru ruled that U.S. Bureau of Land Management generally didn't make an error approving the permit for the lithium mine, though she asked the agency to go back to one part of the environmental analysis their decision was based on, according to the court opinion."

Here is the actual court document:
hTTps://storage.courtlistener.com/recap/gov.uscourts.nvd.148512/gov.uscourts.nvd.148512.279.0.pdf

The way I read it is that there is a minor detail to be resolved but all other legal challenges are over as the courts did not revoke the record of decision.

With nothing else to do, except wait, I thought I would weigh in with my own interpretation/view/conspiracy theory or whatever.

There has not been much discussion regarding as to ''why' the RNS said end of December 2022 or first quarter 2023; i.e. quite a difference in timing expectations.

My hypothesis is that the deal is effectively in the bag but subject to an outside agency meeting e.g. North Sea Transition Authority (NSTA) or some such.

If JOG and partners deal needed no further data then the deal would have been signed by end of last year subsequent to a scheduled December meeting. Should the agency require additional info/clarification then JOG gave themselves a quarter to provide that data/explanation and would have to wait until the next scheduled formal meeting with the outside agency is made; a meeting which may only be schedule once a month or perhaps once a quarter.

Have only used the NSTA as an example. Could be legal teams, financiers, or some such.

All am really saying is that I guess the hold up is due to red tape. Pure speculation but until something definitely is announced it's all I've got lol!

What makes you think LAC is going to get anything like market price for the Lithium? GM have specifically made an investment to get lithium at a lower price as per the original announcement and reflected in TRR RNS today. So maybe lop 20% off from the expected Thacker Pass royalties.

hTTps://www.canlii.org/en/ab/abqb/doc/2021/2021abqb670/2021abqb670.html?autocompleteStr=Bacan&autocompletePos=1

The link is to the Court decision back in 2021, which is now under appeal. This document provides a little more colour to the disagreement ; "A brief overview of the history of the parties and the circumstances surrounding the granting of the royalty..."

For a brief read see Paras 3-11 108, 120 & 163 that presumably form the arguments for the appeal.

As a complete layman seems to me unlikely Bacanora (and hence TRR) will succeed but when it comes to guessing Court judgements it can become a fools errand!

World population is decreasing, not increasing.
https://tradingeconomics.com/world/population-growth-annual-percent-wb-data.html

As you say, JOG’s cash position was approximately £8.7 million as of 30 June 2022. JOG stated that he cash spend of the business will continue to be comfortably below the £1.5 million per quarter run rate previously forecast.

If you assume it is £1.5m then theoretically cash will run out in November 2023. If you assume £1.3m/quarter then cash runs out in February 2024.

If a cash raise is required then perhaps will be done two months before the cash runs out; well after Q1/23

There remains a lot of work to be done. Secretary of State still has to make his first visit to China in February. Janet Yellen has to report back regarding partners and allies. More feedback from stakeholders, lawmakers and subject matter experts.

Biden's executive order, would likely be made in March, is at all

What is clear is that it will focus more on quantum computing, artificial intelligence and semiconductors, military use hardware and not include biotechnology or battery technology. In so far as Belluscura technology is concerned there is no threat whatsoever from Biden. You don't win political points at home by preventing health care devices to be made/sold.

Nearest threat would come from the Chinese themselves in preventing exports but again healthcare/low-tech medical devices are invariably excluded from such actions.

So if the recent share price drop is attributed to Biden comments then this has presented investors with a major buying opportunity.

However, should there be something along the lines of an equity raise or some other yet to be announced issue then maybe the sp fall is justified. No doubt the forthcoming Trading Update will discuss if any such issues are imminent.

".just noticed that JOG now has an office in Aberdeen"

Given there are 40,716 companies registered at that address I would hazard it's just a registered office.
https://find-and-update.company-information.service.gov.uk/search/companies?q=7+Queen%E2%80%99s+Gardens+Aberdeen+AB15+4YD

The Record of Decision has always been slated as Q1/2023 but one analyst did expect the decision to come in February 2023. A bit racy but press reports did say the Judge wanted to make a decision as soon as possible (but they all say that anyway...)

From the Investormeet company
baf3: They did confirm my suspicions. For example Trimate are not capable of paying their full cash payments. The rest is being accrued in the hope that Trimite turns the business around. Duke effectively warned that in the case of individual losses they believe they will be able to maintain the dividend going forward.

CaneToad: The whole point of corporate royalties is not to take on something that is high risk. Whilst it was a concentrated portfolio in the early days I don't think that can be said today. 11% is the highest single contributor and that will decrease with time.

So we can expect one or more new partners in next 3-4 months and one or more buyouts in next 12 months.

Of course, whilst buyouts are good in the short term for Duke shareholders it does mean the better quality companies leave the portfolio.

Was interesting discussion on the NAV. Basically don't expect much change in NAV over a long period of time; it's not their focus. Their focus is purely on increasing the dividend.

Was good to get two of my questions answered in the presentation but given how few questions there are I can only suppose investors are that interested in the company; which is often a good sign!

hTTps://www.youtube.com/watch?v=5ueDUvoL2YA

TRR / Shares Investor Presentation from 28 Nov 22