The X factor?, page-9

When I saw the unmodified header I winched a bit - it seemed like a shout out to all would be downrampers to throw their stuff in here - so I agree with poyneydexter - and the thread name change.

Poor managment, imo, can always go wrong with pretty much any stock, management is, imo, almost a fundamental consideration to investors and traders, because to us, management quality (as we individually perceive it) is always something we can include in our checklists or avoidlists for which stocks to buy.

Beyond those generalities, I think stocks at the spec end of the market (one of which is AVZ) are more prone than others to management underestimating costs and timeframes which has the result of them running out of cash quicker than they honestly expected. So what could go wrong in my opinion is cash spending and cash raising (dilutions) - with AVZ I think it is probably wise to keep an eye on how much cash is going out over time. This is not to suggest management is not being honest - it is to suggest management may be somewhat green in doing what they are doing on this particular very large (unusually large is the point) scale project.

Also the incentive structures for managers like Nigel aren't expressed in terms of deliverables by certain times, but are expressed in terms of share price targets. That means his incentives align with perception of value in the stock as apparently perceived by the market as opposed to having his incentives align with delivery of specific on the ground logistical or financial objectives. So an X factor a what could go wrong is that management could be overconcerned about share price and take its eye off hitting hard targets, specific milestones (getting drills to site, keeping the drill rate up, getting cores to lubumbashi, getting samples assayed) and a whole range of other specific tasks. If their were KPIs on management to achieve those tasks rather than to achieve certain share prices those tasks rather than the share price might be the focus - and ironically that might produce faster and cheaper deliver as there might be less surprises.

Other X-factors - I've been considering the probability of adverse events like - a poor (lower) than expected assay results from the next set of cores - mitigating that risk is the trench reports from unweathered pegmatite (somewhat different locations). By learning more about geology - I'm starting to understand, or try to, how reasonable it is to assume the unweather pegmatite will be homogeneous (and high grade) for lithium content.

The shape of the pegamatites like Roche Dure may not be as they appear in the schematics beneath the ground. But there appears to be so much volume it hardly matters. Just that short term surprises from an unexpectedly shorter strike or from a poor assay are likely to have exaggerated effects at this time when spec investors are nervous.

We haven't seen metalurgicals indicating how easy or difficult it will be to get AVZ spodumene into a saleable product - LiCo2 or LiOH or lithium foil (for solid state batteies).

Most of the other stuff I can currently think of are just stuff that has already been discussed. But a review of the JORC 2012 code shows there are 10 or more Modifying Factors - these can give researchers a list of things to consider.

I believe the truth is factor X for some investors will be very different for other investors because those that do their research themselves will have eliminated or put into context possible risks with particular Xs that others that don't won't have.