Lets talk a bit real now. I dont want to be all positive for the purpose of feel better and I dont want to be all negative either because of frustration or whatever. But my duty as a shareholder is see the things that are there, not that I want to be there.
So lets see the mid- and far future first. Talga is the only (potenial) european anode manufacture of considerable volume. Others might produce graphite flake but not coated anode. There might be artificial anode producers, but they are low volume and I dont see them spooling up production anywhere. The european union is trying to get away from Chinas dominance in this market, as they should be, which puts a strong, constant push on Talga. Politically, Talga is running in open doors.
Even environmentally (save for some NIMBYs), Talga is supporting the transition away from fossil fuels with their product to support stationary energy storage and mobility. Depending on customers of course, but its clear that they do. Their product is proven to be in a league of its own in terms of CO2 emission. Which puts another big push into Talgas sails. So the reason I invested in Talga in the first place, and the makro environment couldnt be better.
Same goes for political development in Sweden. We have a massive change in centiment towards new mines. Now this is not as big of a positive as it should be baseline regardless of the mine that is going to open. But the approval of the iron mine next door just gives the final confidence in permits being granted. I would say there is a less than 5% chance of not granted. There is also a 100% chance of this decision being appealed but again a near 100% chance of the appeal being unsuccessful. I am VERY confident that Talgas 19.5ktpa mine is going to happen. Talgas future is bright.
Lets go to the short term, and the contract with ACC. The fact that the negotiations with ACC are as advanced as they are is proof of the quality of Talnode-C. That, in it self, is a very positive outcome of the ACC situation which does not depend on signing the contract. Though on the material content of the negotiations, the signing of an off-take agreement, I wasnt very convinced of the announcement because Talga had already a track record of not closing negotiations positively. See here:
I dont wan to be a party pooper, but Ill believe it when I see it. Not getting excited for this yet due to past experiences.
It wasnt a particular popular opinion at the time but here we are. The criticism was I should look at the big picture and why so negative? Guys, I am not negative in general. As proven by the text above which is purely there for you to see that I am not all negative. So with that out the way, I can talk about my opinion on the process at hand.
Initially, when the non binding offtake was announced, I gave the contract a 50% probability of materializing. I didnt say so publically here, because the forum tends to like rallying-the-troops point of views rather than sober opinion. However, I wasnt really convinced. That 50% reduced to 20% positive the Friday before (I beleave November 25th). It dropped further to 10% after Monday came and went without a word. I found the selloff on Monday before the due date on the 30th entirely logical. Many think someone tipped off the insiders, but thats just tinfoil hat territory. It might have been the case, but the market can be explained entirely by using your brain without secret whisper talk.
The negotiations could have resulted in a signed contract at any time between the initial announcement and November 30th. However, a delay can only come the final day or the day before the 30th. Talga would not announce a delay of the negotiations like .. 1 week in advance. Why should they? It could still happen before. So that means, if you look at the big picture of this contract, the longer no contract is signed, the less likely it becomes that it is signed by the end of the announced period and a delay or flat out end of the negotiations becomes more likely. Hence the selloff of at Monday.
It appears at the time, that the non-binding announcement was made in order to boost the share price for the CR that we all knew had to come. I rather have a CR at a higher share price than a lower one, so its not like I disapprove entirely of the strategy, but its not nice to be in this situation either. Lets face it, if you want to make a deal, you make a deal. You dont publicly announce you are making a deal, maybe, possibly, have faith in us, we totally didnt tell you this because we wanted to boost the share price.
Now we are in a new situation. Talga said, that we should expect a result 'shortly'. On an initial time scale of ~8 weeks, 'shortly' certainly means a small fraction of the initial time period. I interpret this as 2 weeks. My expectation of the contract being signed, at all, sits at around 50% contract, 20% long delay, 30% walk away. And its going to drop fast starting at the end of the 2 weeks 'shortly' period. So if we dont here anything by December 14th, my expectation is going to be: 30% contract, 10% long delay 60% walk away. If nothing by Christmas, its going to be at 10% contract, 0% long delay, 90% walk away.
As a result of this and past contract negotiations (LKAB, Freyr, comes to mind), I give non binding agreements very little value. I know LKAB would probably be bad if they were involved, but then, why start an MOU in the first place? Also we dont have any material contract with Mitsui either. Mark is sometimes named "master negotiator".. I dont buy that. I have never interacted with him, so I dont know whether he is good at negotiating.. but .. if he truely was a master negotuator, he would close deals and not fail them. He wouldnt need to flash a graphite Tesla, but make a contract. He would only advance deal negotiations to a point of MOU that would ultimately be positive for Talga.
Lets face it, on the customer or partner level contract front, Talga is not great. Which is why I will give very little value to any future or existing non-binding agreements. I dont think Mitsui adds any value to Talga a this point for instance. More likely than not, they are already gone. Development as coating additive for ship paint? Probably a nothing burger. Graphene for concrete? Probably 0 value.
To end on a good note, the battery development on the other hand has great potential. Talnode-Si is much more scalable than Talnode-C as it does not depend on the mine as much. It probably primarily uses graphene, which might be produced from a byproduct of the mine material processing, or being sourced from somewhere else. Same as the cathode additive. These developments have high potential and impact on Talga as they are not priced in yet. But lets not put the cart before the horse.. lets see these contracts first, in binding form.
I know it wasn’t directed at me. I was sad at the ongoing antics of our ‘friend’.
