Talga Updates and Discussion thread

[Semmel]

Hope this works... rhythm34 post

Iattended one of these events. My opinions only.

Talga

• The importance of Talga’s IP was emphasised, and how valued this by partners Talga is in discussion with. Talga owning it its own IP gives potential partners security in any long term offtake deals. They don’t get this same security with companies that are licencing IP from China (basically everyone but Talga?)
• MT is very positive on the recycling opportunity. He said he’s not aware of anyone else that has turned black mass into high performing anode material. A world-first? More IP.
• Expects all appeals to be concluded within months and finance package to follow
• He expressed some surprise that the EUR70m grant hasn’t been acknowledged more strongly by the market. Direct reference to the ~$200m market cap vs $100m+ free money
• Talnode-Si has made it back on to the presentation slides, but no detail on how far along commercialisation plans are. Fears of its demise have been greatly exaggerated! They can’t be telling the market about commercialisation if there are no current discussions underway.
• Aero lithium SQM JV - watch this space...

Macro

• Despite slowdown in EV sales growth, demand outlook for the future is still huge. Possibly bigger than any previous forecasts because of BESS growth. CATL’s listing docs back this up. Electric trucks also a good potential growth area for Talga.
• The need for ex-China supply chains was a recurring theme throughout the day, and the acknowledgement that China has the potential to cause serious problems for the viability of all ex-China automakers. I get the impression South Korea and Japan are taking this a lot more seriously than the EU, and can move quicker. I wouldn’t be overly surprised to see Talga do a deal in this space (maybe in addition to something EU based).
• The benchmark analysts were more bullish on the possibility of price bifurcation in materials markets than I have seen from other sources. Cobalt and Nickel discussed, but graphite anode material seems like the prime candidate for this given both its CO2 profile and the potential for major supply chain risks if China continues to dominate 99% of the industry. You would think the Northvolt situation was enough of a wake-up call about how they can weaponise graphite anode material supply.

Mark’s presentation seemed well received and you can tell he is respected as a genuine expert in the field.

He knows the value of what Talga have, and as a major shareholder isn’t in it todo a deal that will see shareholders burnt. Being a founder led business at a pivotal moment like this is crucial as his interests are aligned with shareholders.


Given Talga’s position in the bottom decile of the cost curve, the strategic benefit of an OEM taking first-mover advantage by doing a deal with Talga is huge. What a strategically minded OEM should be doing is underwriting financing of Vittangi while agreeing to pay an above-market rate (ie above 2024/5 artificially suppressedChina market rate) for the majority of the initial 19,500tpa AAM, to enable theOEM to secure huge volumes (200,000tpa+) at a below-market rate in 2030 and beyond. If Talga can secure this kind of deal it’s a path to achieve the higher margins promised for Vittangi, then still good margins on expansion compared to competitors (because of place at bottom of the cost curve).

A few years ago MT said that they would prefer not to lock up 100% capacity into long term offtakes so as to leave some capacity to sell into the spot market. This means when prices spike they can capture the full benefits of any price cycle likePLS did so well in 2022.

This still seems like a very good strategy. Just need to get the first thing built –something MT acknowledged as the hardest part.

Thank you! From the statement:
"Expects all appeals to be concluded within months and finance package to follow", I must concede that I was wrong.

I expected that we can sign contracts with the current state of permits, both in terms of off-takes and financing. However, that statement means we cannot sign financing contracts until the appeal has been dismissed. Which means, we probably will not sign off-takes either with strategic partners because the level of strategic investment from our partners is uncertain. Meaning, we are still stuck. That is at odds with the statement by Talga that the appeal rejection in October was holding the door shut and we can now make progress. Therefore, my expectation of signing off-takes now was misguided.

Question, what gives us confidence that THIS TIME its different and we will not have to wait for the conclusion of another layer of appeals?

We are probably going to see another 10% dilution within 3 to 4 weeks. Bullocks.

 

[DAH]

Thank you! From the statement:
"Expects all appeals to be concluded within months and finance package to follow", I must concede that I was wrong.

I expected that we can sign contracts with the current state of permits, both in terms of off-takes and financing. However, that statement means we cannot sign financing contracts until the appeal has been dismissed. Which means, we probably will not sign off-takes either with strategic partners because the level of strategic investment from our partners is uncertain. Meaning, we are still stuck. That is at odds with the statement by Talga that the appeal rejection in October was holding the door shut and we can now make progress. Therefore, my expectation of signing off-takes now was misguided.

Question, what gives us confidence that THIS TIME its different and we will not have to wait for the conclusion of another layer of appeals?

We are probably going to see another 10% dilution within 3 to 4 weeks. Bullocks.

Hi Semmel.

That makes me wrong too! I don't think it's that black and white though, albeit MT did somewhat paint that picture first.

I'd be very surprised if debt couldn't be approved with the mining concession as a condition of settlement. Offtakes can certainly go binding, again with this condition and others. I think the lack of clarity on strategic project status as well as not yet being able to confirm innovation funds also play into the situation. There are several moving parts and at least the equity gap cannot be set until the debt package is clarified (inc grant funds on the side). So just maybe holding off whilst getting the mining appeal turfed by the Gov't (surely a certainty), allowing these other pieces to fall into place makes sense big picture. Or perhaps we are simply waiting on appeals to finalise debt, but if that's the case it's very likely by choice IMO.

As far as a CR goes, I'm hopeful your 10% is double what we'd need, being ~40m+ shares, especially with FID hopefully not far off (to bump the sp). With some luck, we might also get early access to some of the innovation grant funds for operational cashflow that can be allocated to the refinery side of things (slow the cash burn).

Let's hope MT can elaborate Thursday - I won't hold my breath given the sensitive nature of it all. I rest easy knowing he has more skin in this game than all of us.

 

[anbuck]

Thank you! From the statement:
"Expects all appeals to be concluded within months and finance package to follow", I must concede that I was wrong.

I expected that we can sign contracts with the current state of permits, both in terms of off-takes and financing. However, that statement means we cannot sign financing contracts until the appeal has been dismissed. Which means, we probably will not sign off-takes either with strategic partners because the level of strategic investment from our partners is uncertain. Meaning, we are still stuck. That is at odds with the statement by Talga that the appeal rejection in October was holding the door shut and we can now make progress. Therefore, my expectation of signing off-takes now was misguided.

Question, what gives us confidence that THIS TIME its different and we will not have to wait for the conclusion of another layer of appeals?

We are probably going to see another 10% dilution within 3 to 4 weeks. Bullocks.

We know the concession permit and the detailed plan are the final pieces. What isn't clear is how long those will take. Mark has demonstrated in the past that he either has no clue about how the Swedish process works or is blindly optimistic, so I've stopped listening to his timeline claims. Has anyone found any concrete documentation about how the concession permit appeals process works? There's definitely no documentation about how long the detailed plan will take because this is the first time that the national politicians have overridden a locality.

 

[anbuck]

He knows the value of what Talga have, and as a major shareholder isn’t in it todo a deal that will see shareholders burnt. Being a founder led business at a pivotal moment like this is crucial as his interests are aligned with shareholders.

That's great and I believe it, but that's not really the crux of the issue. The real question is what kind of pricing can we get from partners / customers. If there is no mark up for being outside of China, then current prices are going be challenging. I could see Mark making a deal that doesn't have a price guarantee at all and just floats with the market given that he's bullish on demand longer term, but then the stock price might not fully bounce until/unless those price increases materialize.

 

[JNRB]

Seems like a great step to me. I didn't realise our recycled Talnode was so progressed. It's a long-term play, but it's the kind of long-term vision that's put talga in such a great position today. It will probably take a decade still for recycling to ramp to up (limited of course by our development timeline but also just the uptake and life cycle of feedstock ie EVs). But once it gets going this could be a huge segment and we are gonna have early mover advantage.
Hey EU more grants pleeeeease $$$

Who's ever had a conversation with an EV sceptic who's said "ooooh but they're actually not that good for the environment because MINING you know"
1. Bullshit. It's not bloody 1880, mining can be done sustainability
2. Cant wait to throw recycled batteries in their face.

(.... I'll leave it to you all to decide if that last point should be taken figuratively or literally )

 

[Semmel]

View attachment 78265
Seems like a great step to me. I didn't realise our recycled Talnode was so progressed. It's a long-term play, but it's the kind of long-term vision that's put talga in such a great position today. It will probably take a decade still for recycling to ramp to up (limited of course by our development timeline but also just the uptake and life cycle of feedstock ie EVs). But once it gets going this could be a huge segment and we are gonna have early mover advantage.
Hey EU more grants pleeeeease $$$

Who's ever had a conversation with an EV sceptic who's said "ooooh but they're actually not that good for the environment because MINING you know"
1. Bullshit. It's not bloody 1880, mining can be done sustainability
2. Cant wait to throw recycled batteries in their face.

(.... I'll leave it to you all to decide if that last point should be taken figuratively or literally )

Let's hope something good comes from that development. Yeah I agree, it's years down the line. If talga survives until then, it can be a meaningful part of the business. Maybe we hear something about it on the webinar tomorrow.