attempted valuation, page-18

thanks guys for all the responses

from what i can see most people agree that having a 400 year mine life is way too long and that u wont be able to realise the deposits true value in time at 17000 tpa - the DCF at the top shows that we are looking around the 80-90 cent mark in terms of free cashflows before taxation and operating costs. it only includes this one project too.

however - it looks like ADY have a dillema in the fact that if it were possible to ramp up production to say 60k-70k tpa (which is in line with the resource upgrade) to realise the value quicker then there is going to be an oversupply on the market and the price will fall

there are a lot of people here saying that there are a number of factors that will boost consumption from its approximate 150ktpa level - the main drivers being china and india. this includes
*mobile phones
*hybrid cars
*lap top computers
and so on

however consumption (if u believe it to be around 150ktpa at the moment) will have to go x10 from here by 2010 to 1500ktpa if ADY increases production by 5x and you would have to assume ADY is the only producer in the world for prices to remain the same and not fall.

here is the logic: if carbonate is 1/4th of global consumption (as one of the above posts states) then thats around 375ktpa raw lithium that is used as carbonate (1500ktpa x 0.25). this equates to 70,488 tonnes of carbonate demand (375ktpa / 5.32). remember the conversion rate is 5.32 for carbonate. if ADY ramps up to 70,000ktpa from here - then they are in themself already the world demand - and remmeber this is if consumption goes up x10 from here??

i know china and india and hybrid cars are great but will consumption go up x10 from here? if you are looking at any less than that the demand wont be there for ADY to ramp up production - and u are stuck with the 400 year mine life.

i could be wrong - and if i am i would like to be proven so with logic. if im wrong give me a reason. thats how i see things as they are knowing ADY for 2.5 hours and nothing about lithium lol

thanks