The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
If there’s an offering, Al has to go. Possibly Eliot too. Repeated comments full of optimism and about how good the tech is - from both of them.
If they end up raising funds, and wait until the nth hour to do so, well after the SP has been hammered, it crosses into gross mismanagement territory… and the buck stops with the CEO. Eliot can take his share of culpability in this farce too.
No, that’s not what I mean.
Demand for lithium does not surge when a mine closes - why, all of a sudden, would there be a surge in demand?
If a mine closes, supply is reduced and demand continues to increase at the same counterfactual rate. In theory, prices increase as miners have more bargaining power due to reduced competition.
Low cost miners have better competitive advantage, and thus better bargaining power. Demand for lithium is unaffected by this.
Demand will be increasing regardless. If supply doesn’t keep up with demand, prices rise.
Anyway, the important thing is that, Kodal, as a low cost producer, are finding themselves in position where low lithium prices mean;
- Competitors are ceasing existing operations
- Competitors are not proceeding with new operations
- Potential competitors are deciding not to enter the market
Whilst demand is increasing (EVs, energy storage, portable electronics).
Th current - artificially - low lithium price (‘artificial’ due to China subsiding its lithium supply chain (consumers, manufacturers and producers) makes domestic low quality lepidolite mining economically viable) is doing Kodal a favour by eliminating competition/constraining future supply.
In theory, prices should rebound (highly unlikely we’ll see the levels seen in 2022), by which point Kodal will be producing spodumene.
It doesn’t matter whether it’s made public via RNS, or via YouTube. That isn’t the issue here.
The issue is that the CEO of the company (£300m market cap, purported revolutionary tech, ‘Don’t worry’ about funding, endorsed by global leaders and authoritative names in oncology) is about to be interview by a small beer twitter influencer.
Why not genuine, established fund managers and analysts, why not established biotech and/or investment journalists?
It paints Avacta as relatively unprofessional, small fry, desperate etc. and will get institutional investors’ backs up - most of whom see the recent ‘democratisation’ of investing as an affront; and such an interview would be received similarly.
If Al thinks this is how to do better engagement with investors, he couldn’t be more wrong.
I’m sure it will be made public - it’d stink to high heaven if it wasn’t.
It shouldn’t be happening - full stop.
And as for Myles interviewing other CEOs - CEOs which companies? £300m market cap? With supposedly revolutionary tech? In the Biotech sector which is heavily dependent on partnerships, and institutional investment (more so than others)?
This would not be a good thing for Avacta - trust me. It would definitely be a good thing for Myles McNulty though.
If this interview goes ahead, I’d be thoroughly disappointed. Who is Myles McNulty really? He’s just another twitter influencer who happens to be a PI, like most of us here. Why do an interview with a twitter influencer, why not do it with genuine fund managers/analysts (rather than one who purports to be)?
Can Alistair *AKA the CEO!!* stop drip feeding information to a select few, and implement a proper, structured comms/investor relations strategy. If anything, can someone relay this on to him. Myles, if you’re reading this - can you just scrap the interview and relay this on to him.
It seems like there’s a handful of PIs who the CEO is willing to regularly communicate with, but unwilling to regularly communicate with his full investor base.
It’s beyond ridiculous - it’s unprofessional at best, it’s risking breaching regulatory requirements at worst.
This will damage Avacta’s reputation with institutional investors, it’ll discredit the company to a degree - all so a twitter influencer can get a bigger following and greater monetisation of his content.
I’ve been thinking this for a while now - and this charade reinforces my thinking - Al is out of his depth. The two recent hires are fantastic and signal a positive transition from a research company to a clinical stage biotech - Al is an academic, he’s a research guy.
So, it’s clear in my mind that it’s time for Al to stand aside now, and to find someone to replace him who is much better on the commercial side (because I think Al isn’t good enough, for the company’s market cap and the quality of the product/IP).
If profits are expected, then Bernie should be looking at using a sizeable % for a buyback. That’d light the fuse under the share price/market cap.
When the DMS operation is in full swing, I’d like to see at commitment of at least 10% of profits per year used to buy up shares. There’s no debt to service, float plant development, mine development and exploration costs won’t be/don’t need to be $100m.
At the same time, I’d also like to see a consolidation when we’re producing - either a 10-1 or 100-1 - to bring the number of shares outstanding down to a reasonable number.
It’s a good point Laverda; there are many predictions of huge increases in supply over the next few years - to the point that it’ll outstrip demand… and this will result in a precipitous fall in price per tonne.
If investors, and companies, see the price per tonne fall below income modelling assumptions - projects will become uneconomical and be delayed, put on hold, mothballed or cancelled, and less funding will flow into the sector. Thus will result in slower growth of supply, and a subsequent supply/demand imbalance and thus a less precipitous drop in price per tonne (perhaps an increase from here, where it stabilises - perhaps somewhere between Bernard’s low estimate, and other companies’ high estimates).
Still, $2000 per tonne of SC6, would result in the DMS operation generating $250m per year. Half of which would go to Kodal - so, after ironing out initial kinks, first year revenues of circa the current MC. And that doesn’t account for the Floatation operation which will ~triple that within ~3 years.
If price per tonne does rebound, then the above figures should, accordingly, be revised upwards.
I’m utterly dumbfounded at the inability to read an RNS. People just do not have even the most basic comprehension skills.
This is why the markets are utter rubbish these days. It’s dominated by simpleton traders due to trading apps/easier retail access to the markets.
2024 is going to be a exciting year for KOD.
DMS plant construction
Flotation plant designs/plans - and possibly accelerated timelines
Lithium resource upgrades
Gold resource upgrades
First spod produced
Possibly some indicative plans for Nielle
Possibly some IIs buying significant stakes
Possibly another offtake agreement (from Hainan)
Next step getting mining license transfer and latest plans signed off by the Malian government - hopefully by the end of the year!
Looking very positive after 6+ months of relative stagnation.
This is exactly what I room from the RNS - absolute commitment from Hainan, as they need a steady feed for their new processing plant.
There should be a steady news flow now after almost a year of no real news;
- Construction updates
- Increases to the MRE
- Completion of license transfer and other admin processes
Hopefully we’ll start to hear more about Nielle in the latter half of next year too!