Next ship named, page-1122

OK, so I plugged in some numbers and GXY probably was cashflow positive at Mt C in the 2nd quarter. But it's not exactly something you would want to write home about.

GXY shipped 30k in the 2nd quarter. So if they produced 45-50k in the quarter at, say, a cost of US$375/t, that's a total production cost of roughly US$18m using the middle of guidance. If they got, say US$675/t, they would have received US$20m. So they probably were just cashflow positive in the second quarter.

But you need to remember that this is a $500m+ company. Most large resource stocks on the ASX trade around 4-6x FY19E EBITDA.

If GXY shipped all 50kt, they would be making around US$15m EBITDA or annualised US$60m = AUD$85m. So it's trading at about 6x EBITDA.

Then you need to factor in further lithium pricing declines, which are about as certain as night follows day. A share price of low $1s would provide a better entry given its already trading at the top end of the industry range with further EBITDA weakness to come.

Hopefully this is of benefit to some.