Joe Kaderavek #2 - Cobalt Investors Eyeing Bottom of Market?

What is happening with Cobalt as an investment? Some EV/battery metal commentators have spoken very bearishly about crushed EV demand in recent weeks. But, has COVID-19 actually been an accidental catalyst that has sped up a transition toward an EV dominant economy with more futuristic energy storage capacity? Kaderavek argues yes.

EV subsidies had been due to be phased out but are now being revisited, and the long-term EV picture is really starting to take shape. Cobalt investors should look at the long-term picture rather than focussing too much on short-term cobalt supply destruction and EV demand disruption. The long-term picture for cobalt and other battery metals appears to be very positive as China production and supply chains power through. Will the demand from the West match their ambitions?

What did you make of Joe Kaderavek? Are you interested in cobalt investment?

We Discuss:

1. Joe's Background and Work at Cobalt Blue
2. Impact to Consumer Behaviours: COVID-19 Motivating Positive Strides Towards Green Energy
3. Globally Increasing Scale of Subsidies and its Impact on Investors
4. Battery Metals Companies' Strategies During This Period: Survival Mode On?
5. As Investors, What Should We Focus on and What Can We Expect?
6. Changes to Means of Financing Battery Metals Companies
7. Long-Term Outlook: It Can Only Get Better

Hey Joe, how are you doing, sir?

Joe Kaderavek: I'm very well, thank you for having me on.

Matthew Gordon: No, look, it is great. Great to have you back on again. I think people really enjoyed your last conversation with us. You helped us make some sense of the macro thematic for Cobalt. But just for people new to this story, why don't you give us a few minutes on your background and perhaps even Cobalt Blue before we get into the macro story, or update on the macro story for Cobalt and the battery thematic.

Joe Kaderavek: No problem. Thanks Matthew. For those I've not met before, my name is Joe Kaderavek. I'm the CEO of Cobalt Blue. I'm an engineer by background. I have a mix in my background of investment banking. I was head of resources at Deutsche for a period there as well, but also, I used to run hedge fund money and investment, and that's where I first came across energy storage as an investible. I've got about a decade or longer under my belt of investing in these thematics. I've been CEO now for four years of Cobalt Blue, and we are bringing in the largest green field supply of Cobalt in the world into production - nominally 4,000t of Cobalt metal equivalent. We are based in Australia. We are an ethical source of Cobalt. And our production philosophy is both a mine and a refinery. We're going to be making a high-value intermediate, an NHP, or a battery-ready Cobalt sulphate.

Just briefly on the project, we'll be at a final investment decision in 18 months. We are rescoping a PFS, where if you like, cost optimising a PFS, which will be due in the market in the next three weeks. That was on top of the original PFS. We are very excited about the economics that they will showcase to the market. Beyond that 3-week mark, we'll be building a pilot plant by year end, and then a full-scale demonstration plant, and that will prove up our production processing. What is really important to note there is that we'll be releasing commercial samples to, at this stage we have 10 global partners who are interested in that off-take and potentially in the project. And to date, three of those partners have allowed us to name them publicly: that is LG International, Sojitz Corporation and Mitsubishi. A lot of the conversation I'll have with you today will, not necessarily from a particular partner, but will give you the flavour of what we're seeing from our commercial partners. For us, it's a big project. FID in 18-months. And in the near term, we've got a catalyst of a Cost Optimisation study.

Matthew Gordon: Thanks, Joe. That's fantastic. Sounds like things are going well. You must come on and tell us the Cobalt Blue update story. But today we're going to help people understand what's happening on the ground. You know, the reality of the situation versus the kind of, you know, the commercials that you are seeing and hearing with your conversations. Now, obviously travel is a bit of an issue for you guys, even in Australia. It's hard to get around, but who are you speaking to? How are you getting a sense of what's happening in the Asian market, or even globally?

Joe Kaderavek: I just touched on our development where we looked to provide samples. Now, those partners have volunteered to be part of that process, and to be very clear about that, what we want to do is pre-qualify as a supplier to tomorrow's battery industry effectively. What we're seeing through our contacts in Asia: Korea, Japan in particular, but China as well, we have recently started talking commercially to India. India is a fascinating market, albeit coming off a low base. And importantly in Europe, Europe has, and I'll touch on reasons why, shortly, Europe has had a huge catalyst in terms of its own formative views on battery take up as well. What I'm hearing is a huge disconnect between a very positive long-term Cobalt demand, or battery materials, broadly story. And when I speak to investors, a very negative near-term story, which is plagued by demand, destruction, lower oil price causing issues with, you know, transferring across to EVs and the like. And to me, I've never seen such a gap in the time I've been CEO,

Matthew Gordon: But there are a lot of factors at play here. And I think it's important, maybe we can talk about some of those, or get your sense of where those things are. You mentioned there that the oil price is impacting the battery thematic. Also, within that, there is the consumer buying behaviour; people's predictions. And I've seen polar, polar opposite guesstimates by brokers, right. You know, literally opposite ends of the spectrum. They are making completely different calls from each other. I don't think there's a consensus as such, but what's your view on where this is going with consumer behaviour for, and what does it mean for the battery manufacturers?

Joe Kaderavek: Let me break down my answer in some components, but first and foremost, what I'm seeing during this COVID period is an acceleration of trends which were already in place. Some of the trends, which I hope to talk about with you today: de-carbonisation on the renewable side, some of those solar and wind policies have been around 20-years. Electric vehicles subsidies around 10-years. I'm not seeing any radical new government policies or company behaviours as a result of COVID, but I am seeing a number of crossover points where economics favour the battery outcome. And I am seeing a number of policies which are being reinstated at a much more aggressive level because of COVID that will accelerate the transition. In terms of overall consumer behaviour. I can stratify the answer between what we're seeing in the renewable and energy storage sector and in the EV sector. If you don't mind, I'll keep the EV sector to second, but I'll just talk about renewables first of all.

So, very long data trends, but because of COVID, we're actually consuming less energy this year as economies around the world. And because of that, particularly in power terms, what we're seeing is pricing is dropping and high cost in fuel sources are being knocked out. And because solar now is so cheap to deploy, now solar, to give you some idea, is around USD$30Mwh to install on mass. If you try to do that with a brand-new coal-fired plant, you are roughly talking 60 megawatt hours. Now there are exceptions, there is entrenched coal, which is lower than that, but that's a broad rule of thumb. Because the amount of solar and wind that's coming in, lower prices are forcing out some of the incumbent coal. There are two tipping points, which I think will interest people. Firstly, in the UK, a small quirky one is that for the last 2-months in Britain, you guys have been running on zero coal, believe it or not. The more interesting one, or the more profound one is, in the US this year it is predicted it will be the 1st year in US history where more power will be generated from renewables than from coal. That crossover point happened last year. That's not a COVID issue, but it has been accelerated because of the price drop and the fact that it is accelerating the decoupling away from coal. And then let me be really specific because there are those out there who say, ‘Oh, you are counting certain statistics.’ When I mean renewables are outstripping coal, I am talking about solar energy, thermal and photovoltaic. I'm talking about wind and I'm talking about hydro. I'm not talking about nuclear. Just those three renewable categories this year will eclipse coal. And once you've baked in renewables, you aren’t losing them - not on these economic trends.

And what's even more interesting in my mind, and I'm going to quote our colleagues at Wood Mackenzie here, they estimate by the end of the decade, solar and battery will become the lowest-cost peaking power in the world. In other words, the gas plants you see around the world now, which are on standby during peaks, that will be displaced within the decade by solar and battery storage. These grids are going to be incredibly dependent on renewables. Now, as an engineer, I need to stress though that it's not a one-way street; there's a limit to how much renewables you can hook up. There are issues such as frequency, stability, et cetera. But in general, the trends are extremely positive towards large scale take up of renewables and ergo large scale take up of battery and lithium ion technology. These are very profound trends that were in place before COVID but have been accelerated because of the COVID effects.

Matthew Gordon: Okay. So that's interesting. I think one of the interesting things you said there actually, Joe, was that you mentioned nuclear in passing, and you had separated out from renewables, because I think the market does see nuclear now as a zero-carbon fuel. As part of the mix, all that weight of solar, hydro, wind and nuclear is creating a very difficult problem for fossil fuels, which is going to have a knock-on effect on pricing across the board. What do you think with regards to the renewables? I mean, are we going to see them can then continue to gain ground? Are we going to see cheaper prices? I mean, what does it look like?

Joe Kaderavek: What we're seeing in Australia, and I am skewed because Australia has a very high solar resource. You know, we are the Spain, if you like, equivalent of Europe. We are skewed towards solar and wind. But what we are seeing is firstly, an abundance of capital being deployed in this country. And the same as in Europe, typically superannuation, pension funds will take the other side of that exposure. If you give them a 3%, 4%, 5%, 6% coupon, long-dated, decarbonized - they love that. They will be part of that infrastructure build. There's good money available there. We're seeing utility scale deployments now on an unprecedented scale, these are 10x, 100x bigger than they were even only a handful of years ago. There are limits now. They are stressing the grid here, then I'm sure the same as in Europe, because there are limits to how much you can deploy.

Ultimately, solar generates during the radiance period. It's very small. And then you want to be consuming that in a peak period, hence you need the battery. But there are other issues such as frequency, stability, et cetera. There are other issues in terms of being able to transmit from where you are generating the solar into where you are demanding the power. But nevertheless, we're seeing a tremendous take-up, and I think there'll be an engineering limit to that deployment, which the economics will run at very hard. There will be some coal that's entrenched, some very low-cost coal in the world, and in Europe, and in the US in particular. They are basically generators that sit on top of coal mines that you are not going to get rid of from an economic force. But the vast majority now, there is risk to, and the term investors use is stranded asset. You risk making stranded assets. And as I mentioned earlier, **peaking power, which has always been that standby power for gas, if the battery deflation forecasts are correct, I think within 10 years, you are going to start to get a tremendous uptake in a different style of power generation for solar and battery. And all of that, you know, is very positive for battery take-up.

Matthew Gordon: It is very positive. It has been driven by consumers. It is being driven by governments. You've got funds now who are changing their direction. Like people like BlackRock over here is kind of the big example we use, where they won't invest in fossil fuel companies anymore. There is, I think that the mood is changing and that usually says that money will be made available for the infrastructure for projects to get built. But it comes back to the question, which is around, you know, buying behaviour; consumer attitudes at the moment having been through what is quite a shock period for most in the sense that COVID-19 is not something that most people have experienced before. You know, markets haven't experienced to this degree before. Despite money maybe being made available, the consumer buying - there will be a gap, won't there in terms of this buying? But the infrastructure is in place. I'm thinking mainly about, you know, the automotive sector, for instance. They have invested USD$300 billion to date on their battery, or, you know, predominantly battery-driven vehicles. They're not going to be swayed by COVID-19. You know, the short-term repercussions there, but consumers may be. But that has a knock-on effect for things like, you know, subsidies; the need for subsidies or the continued need for subsidies.  Are you seeing that?

Joe Kaderavek: Let me quote from something that I saw recently: UBS do a rather good series of polls of consumer discretionary purchasing. What they do is they look at the top seven automotive markets in the world, and they ask a bunch of very typically simple questions. What's your preference for purchasing a vehicle? Is it a battery vehicle? Is it an ICE, et cetera. And for the first time, and this is the stats that just came out in the COVID period, driven by trends that were in place, and I'll go back to this pre-COVID trend, coming into Q1 this year, globally we had over 300 unique battery electric vehicles in the consumer market. Now you go back 10 years, that was maybe 20 vehicles. You go back 10-years, you had a low-cost, low-range, low-quality offering effectively. And this is a bit of a disparaging quote - a golf cart - for wont of description. Now, Tesla and others have been fantastic at changing their whole image. But today, battery electric vehicles are such high-quality infrastructure is in place. Range anxiety is not the issue that it was before, and the badge says it all. It's a badge they know. If I'm in Australia, I’m a Ford driver, I'll go back to a Ford. And what UBS found is that for the first time in the poll’s history, provided two things are in place: condition number one is that consumers now want a 300-mile range. Now I'm a metric engineer so that's a 400km, 550km range, which is a fair range. And two, provided there is broad, but doesn't have to be exact, but broad price parity between the two.

What we're seeing is that, sorry, what UBS reported was that for the first time in the poll’s history, people are preferring battery electric vehicles. And what the impact of COVID is on the psyche is that people are waking up with clean skies. In particular, a large chunk of the particulate matter of the smog that surrounds them is from vehicles. People who were sitting on the fence till now have largely gone past that, is it a high quality? Do I get the range? All those issues that plagued EVS four or five years ago are now done. COVID has woken up and there's a clean sky out there. And they're saying, you know what, I'm going to invest in these things. And I think subsequent to that, the scale of subsidies, and I'd like to touch on those, if I can with you, is so enormous that it's causing the purchasing price of these mass market vehicles to become decidedly in favour of an EV purchase.

And if I can just touch on some of those: in your neck of the woods there has been some fantastic policy decisions. Fantastic from the point of view of EV take up. Let's talk about the Germans - the Germans are talking about, it is yet to be established in legislation, a €9,000 subsidy on cars up to €40,000. Now that's a whopping great big sticker deduction. And that makes that car automatically reams cheaper than an ICE vehicle. So that shows you the scale of the subsidy. Secondly, the Germans are also talking in their public policy about mandating infrastructure at every gas station. It is an overwhelmingly positive idea. It's interesting, even the pundits are saying, and the experts are saying, not necessarily practical because that is tens and tens of thousands of rollouts. But it shows you the positiveness. In your neck of the woods, the UK government is talking about £6,000 straight cash-for-clunkers deal. And that's a straight conversion from an ICE, an old gas car into a new EV.

What's fascinating, I find, are the French. The French have earmarked €8Bn, again, a COVID decision to largely bail out their national automotive industry. 5 billion of that is being earmarked for Renault. And what they're going to do is use taxpayer money to retool their automotive processing. And they're going to retool along two broad lines. One is environmentally friendly internal combustion engine vehicles - so very high spec diesel and gasoline cars, no doubt of that. But a large chunk of that, and we are yet to see the final policy, will be directly EV support. What we're seeing is taxpayer money being used here and now as a result of COVID to make decisions that the likes of Renault and others wouldn't have made for maybe a couple of years and may not have had the capital to deploy for a few years.

When I talk about COVID being an accidental catalyst, we can talk about renewables or EV, but there's a whole bunch of little data points such as the Renault experience. That points to me that not only is that retooling occurring, but the subsidies are in place. And I'll just [inaudible 20:09] landing on the French. The government target is for domestic producers to make 1M EVs pa in the near term. That will put them way, way past the Germans. And that will set off, I've no doubt, some competitive domestic policy between them. It also means, all those subsidies I talked about, it also means that this year the Europeans will overtake the Chinese as the biggest EV market in the world, and then will maintain that.

Let me just go across the Atlantic now into US, because it doesn't get a lot of coverage. I personally think that one of the biggest catalysts for EV take up is a change of incumbent in the White House. Now, I'm not being political. You can have your own view on that. But it is really clear that the Democrats have a carbon neutral policy in place. He stated that if he were to become, if he were to have the keys to the White House, you would undoubtedly have a significant EV policy take up in the US. Already in the US, 47 of the states have EV subsidy policies in light of almost no subsidies at the federal level, to give you some idea of the self-help that the states are going through. These are states which are basically going it alone.  I think that's the nearest catalyst, and certainly that's not being talked about in the market as an option.

In China, where the market has been very focused on EV take up in the last few years, and if you recall late last year, second half, EV subsidies were coming off and EV demand was coming off, and that's the whole reason the market tanked. They've actually now rolled forward to use their existing policies, From a Cobalt perspective, if I can just briefly touch on something that's dear to my heart, they are range based subsidies. They are not subsidies that will go to any vehicle. You have to have a certain range, and those range of high-energy, density batteries, which typically contain Cobalt, and there've been rolled forward two years.

One of the most interesting statistics I'm hearing from COVID, I appreciate that the Chinese entered the COVID period earlier than the rest of the world, but already in May, the statistics that are coming to light show that year on year, the May EV demand is actually up year on year - which is phenomenal if you compare that to global autos, which are down typically 50%, 60%, 70% in most jurisdictions.

Matthew Gordon: I think that has surely been skewed by the fact that in April and March, there probably wasn't a lot of buying. So that might be a little bit skewed. But the interesting thing, the thing I heard there was that because of the subsidies, because these governments all across the world are either maintaining or rolling forward or putting in place subsidies at the grassroots level, all the way through, the long pole in the tent for me was always the automotive companies needing to recoup their R&D costs on these new EV cars. And therefore we, the consumers are having to pay 50% premiums for the pleasure of doing business with them. If these subsidies do remove that, or mostly remove that you know, premium as it were, then I think that that's the last barrier here. What does that mean for investors? It means that you think the automotive industry will sell. You want to use that China example, I guess we'll need a couple more months to see what is happening elsewhere in the world, but you think there won't be a gap to fill. There won't be a reticence on behalf of investors who have been through COVID. Who've been through that shock of COVID, and you know, the need to keep money in their bank accounts or under their pillow or wherever they keep it. You think that the markets will get back into business quickly.

Joe Kaderavek: Yes, look, I think, and let me be very clear; I'm still talking about a four-quarter effect, this is not the near term. I will just make a point, Matthew, on that China stat: I quoted May, but that's a year on year stat. In terms of uptick, it's not a near-term month on month trailer. So that is a bit of a small data point –

Matthew Gordon: But how do you work that out? Well, obviously, last May, the figures were what they were. And, you know, May, you are saying this May, it was slightly more than last May, right? Year on year, right? But if no one has done any buying in April or May or March, there is a kind of cumulative component there. I think that was the point I was trying to make.

Joe Kaderavek: I see, yes. I get that, but I'll just go back to the UBS data that we've seen. There's an effect of, it was named after some economists, who I have subsequently forgotten, which is when you want to make a purchasing decision to a new technology and you defer that decision you actually don't go back to the old technology. You have baked in that decision. I think in the Western world, where household purchasing has been delayed, or we talked about the oil price before, I think those decisions will be deferred, but will ultimately go back into the purchasing of an EV as such.

The other point I'll just make, whilst we're on oil, a lot of jurisdictions in the world, and I know the Chinese are one, and I think the UK are another, you simply can't translate an oil barrel at USD$40 to an equivalent pump price. The tax structures are not added, the law and tax structures. We're not seeing that subsidise that, that cheap oil flow through to the consumer pocket as per some of the theses that I've been reading about. So cheap oil doesn't necessarily mean a cheaper running cost for your ICE?

Matthew Gordon: Well, I think that's right. It has definitely been borne out around here. It takes a while for it to hit the forecourt, and by the time it does markets have changed again, and we the consumer get screwed again.

But let's talk about consumer behaviours that, can we just talk some more around the sort of company behaviours? So again, as an investor, I want to know how companies like yours, like Cobalt Blue, are thinking about the way they go about business in times like this. You know, some choose to kind of hunker down and hope it all goes away, and some want to get back and into business. But how have you changed your behaviour through all of this?

Joe Kaderavek: Yes. Look, I would say this to you: because we're in a fairly idiosyncratic specific metal such as Cobalt, and because a large part of that demand is in the battery, and that's certainly the way our production philosophy is slanted towards batteries. The prequalification period for us to qualify our Cobalt into tomorrow's EVs is such a long data process that COVID hasn't necessarily changed what we do. And I will be very specific: some of the design feedback that we're getting suggests that a new EV takes four to 5-years of engineering and design to get into production. What we're hearing from our battery partners is it takes 2-years to prequalify a battery into a particular vehicle. When you think of an EV battery, it's a highly customised chemistry set, effectively, for that vehicle. What does that mean for the upstream guys like us? We are being tapped now for interest to prequalify, to then pre-qualify again in a particular battery type.

And I'll give you one broad example: the Chevrolet Volt, which is being rolled out in Europe is a 500,000 unit initial deployment. Now, one of our partners is the sole supplier into that particular market. And if you take all the engineering that's gone into it and then the lead times, they are significant programs which affect all of the upstream materials producers. From our point of view, we're such a long-lead, high hurdle to enter production business that really, COVID is a blip. As opposed to, if you are a Copper miner, or a Zinc miner, where you are selling a consentrtate, or a low value product into a very liquid market. A huge liquid market is completely the opposite to what we do.

Matthew Gordon: Yes. I think that's a good point to make. And there's going to be other commodities who are in the same boat as you, and there will be lots more in the Copper camp. I think that's kind of fascinating to me. Again, from an investor's perspective, what should we, as investors be thinking about now? Should we, because, you know, I think a lot of people dumped their stock during the peak, and we have seen some great V-shape recoveries from most companies and most commodities. For me, it was a perfect time to buy quite frankly. Is was wonderful. But what should we be thinking to buy in the future? Is this is a slow, steady state growth. Are there some big catalysts to look forward to? If indeed some of these subsidies do kick in quickly. I mean, where should we be looking?

Joe Kaderavek: I guess the first guidance I'll give you is that in energy storage as a whole, so we have talked briefly and touched on consumer devices, but largely talked about large-scale utility energy storage. That's including small-scale storage in your home, and then EVs. There are so many different niches for energy storage, for batteries, that no one technology will be the winner. I'm old enough to remember, and I'll probably confess my age here, I'm old enough to remember the VHS and BetaMax argument days, where one technology had to win. It's completely different. You are going to get three or four different technologies win here. Even within this Cobalt versus no Cobalt battery space there is room for both battery types. The LFP battery, the non-Cobalt battery has a certain niche: lower energy density, cheaper battery, and has a certain niche in China. It's a very Chinese-oriented chemistry. The thrifting into the high-nickel batteries will have their own mass market, longer-range style. And then I think that's the bulk of the EV market.

In terms of energy storage, I don't even think of Lithium ion necessarily has a natural advantage in some of the characteristics those batteries need. Those are long dated batteries that shouldn't have very large discharge capacity, they should have multiple cycles. And there are other technologies that flow batteries may lend themselves to more readily. What I'm saying to investors is, there are enough niches out there and different technologies, that don't necessarily assume there is a plain vanilla solution to all. I believe genuinely that both Cobalt and non-Cobalt batteries will survive next to each other in different niches. And so, do your research on the niche as well as the material that you are looking at. That's probably my first point.

The second point is what we have learned from the last 18-months, is that demand can often be overhyped. And we saw that in the Cobalt run in 2018, that basically this demand was going to go on forever. And what happened was it didn't really take off to expectation in the rest of the world. And in China, they turn the tap off. So be prepared to test the thesis. Is someone going to buy that vehicle without the subsidy? Would have been the right question to ask two years ago or last year. Today, I think the subsidy gives you an obvious answer, but if you want to put risk in that to test that thesis, ask yourself what happens if that artificial incentive is taken away? Or conversely, what happens if an automotive producer manages to crunch battery costs, particularly this so-called cell-to-pack cost structure that some are focusing on, is that a catalyst on the upside? So, really have a good long look at the risk factor, and don't be blinded by the long-term growth rates here. And I think we're going to see another cycle effectively ahead of us. And in my mind, we're seeing commercially some initial building blocks of that cycle in place today.

Matthew Gordon: Interesting. That's really fascinating.

Question around the way that companies, well, certainly the battery commodity companies get financed. Do you foresee a change in the way that people go about getting financing? I mean, you've talked about three strategic partners having a look at what you are doing. We've had Tesla talk about buying large Lithium companies, and, you know, trying to be sort of end to end: from mine to car, as it were, which is traditionally, these companies get funded by, they kind of get funded by strategic partners or big banks or big institutions, that's the way. But are the automotive players going to become a little bit more all-powerful and try and control that entire supply chain to some degree? I mean, are you seeing some of that? Are those the sorts of conversations you are hearing?

Joe Kaderavek: I think the answer is yes and no. What I'm seeing is that some are going upstream and trying to get the security of supply they need. And some are creating preferred supply networks within their battery producers and giving their battery manufacturers the confidence to do their sourcing upstream. Some of the bigger EV makers in the world may never own mines, may never own a precursor maker, may never even actually own a battery facility, but they're encouraging their suppliers in turn to commit to production runs of the scale that we talked about. Because you talked about before, about costs like R&D costs, quantity of scale is a huge thing in this market. If a global EV producer can give its battery makers the confidence to source Cobalt or lithium, on a scale that, say, a 5 or 6-year production run of X quantity. And that means that that maker has to make a purchase in the upstream, then they'll provide that.

One of the things you've got to remember in both the Lithium and Cobalt space, there's really no terminally traded market for both. You know, in a previous interview, we talked about the fact that Cobalt is traded on the LME, but it's not a marker that has any significance from a financing perspective. As a business, when we go into production, sorry, prior to that, we have to show a bank an offtake agreement with a battery maker at a fixed price in lieu of a market that we can say, here's the long-term curve for the market.

So again, Copper, I can point to an 18 to 24-month timeframe and say, that's the futures market. I can hedge it. I can't do that in battery materials. So not only our production run is large and long dated, we don't have the ability of an inter-mediated liquid market to sell into. We need a champion, typically, a battery champion, or a precursor champion, to straddle the fence and say, here is the offtake agreement, and go take that to the bank. Or, converse, you take the capital and invest in us directly and help us. But it's tough. Without an LME liquid market, without a terminally traded market. It's tough.

Matthew Gordon: Because I think we got in contact when, I think, one other CEO described the battery market as being crushed because of COVID. No more than 3 or 4-weeks ago. Your response is actually, I think that's not the case. And what I'm hearing from you today is, actually the future is bright, and investors should not be concerned.

Joe Kaderavek: Oh, look, I'll be a little bit cynical. I don't care. I really don't care what the near-term effects are, the 2, 4-quarter effects. They are largely in the price. If you look at the companies that are trading in this space, and Cobalt is a good example, we've all had the down wave. We are all at peak fear right now. And if you haven't positioned yourself for the negative effect of COVID, guess what? It's too late. I don't think it's interesting to discuss that at length. What I think is interesting is this dichotomy between what we're seeing commercially, added on top of that, what we're seeing from government response and company decisions, and on a 4 quarter, 2-year basis, we're seeing some genuine positiveness in this space. And you know, traditionally, battery materials, investors traditionally were long-dated investors. Some of them have forgotten the reason they invested. They got burned on the downside. What I'm saying to you now is, I think there is plenty of positiveness, albeit not in the market at the moment, in the investment market that will come to the fore over the next one to two years.

Matthew Gordon: Brilliant, Joe. Thanks again for your take on the market, and you reeled off some great stats for people to maybe go rummage around and see what else they can dig up. But you must come back on again, it is always fascinating talking to you. You've got that, you are kind of a, you are a CEO of Cobalt Blue, but you are also an ex-banker and ex-hedge fund manager. I mean, I guess you'd probably be working out the big thesis, but why invest and why now, would you?

Joe Kaderavek: Yes, look, to be really blunt about it. The Cobalt sample program that we're going through with our Feasibility Studies in our pilot plant, it's a case of where we're getting interests now where we wouldn't have thought interest would have come this early. And it's largely to do with the thesis we talked about. These are long dated off takes. The purity and the specification is at a premium. And if you are a non-African source, an ethical source, safe jurisdiction, you are absolutely in the right place at the right time right now.

Matthew Gordon: Beautiful. Thanks, Joe.