Ann: Trading Halt, page-67

I'll try and repost the below and ensure it's not "Off-Topic - Wrong Stock" as it's very important in any stock you own to have an understanding of how it stacks up to its peers in terms of valuation. I'm quite surprised and a little annoyed as that's only the second time in 12 months i've had a post removed. I apologise and will try and correct it.

Some individuals were making some comparison in valuation to some Australian producers and the purported desire of investment one may take.

The below is my reasoning as to why IMO avz provides better upside in terms of current EV.
To make that comparison i will need to use and detail some things from other stocks to accurately make that comparison. I'm sorry that people felt that this was "off-topic" as IMO it's exactly on topic if you're making comparisons to end user's in terms of investment opportunity and value appreciation.

it is interesting that the original post which made the initial comparison remained - so i make inference that my response is directly to that post 44276028

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$A560M to take on 360m debt and 100m in cash = 820m.
Looks nice if you consider EV.

However i don't see 820m in value to buy an asset which produces at a loss. As a opposed to AVZ which despite not being a current producer has DFS figures which are much more economic even at depressed lithium pricing.

Buying a loss making producer is like buying a car for 50k which has a 40k debt on it. It only makes sense if the car is worth 90k. IMV the example given about it being more astute to buy AJM and PLS as opposed to stumping capital is incorrect IMV. The below is substantiated information to support that opinion.

So in the example given expediture choice for those stock is 800M which have only ever made losses. To justify a MC in the commodity world you'd need to at least generate 80M in annual profit. Given that's closer to their annual losses. The below is a cited reference to why i believe that achieving annual profits will be difficult.



PLS's last quarter was decent because it essentially sold stockpiles. Not hard to have low operational cost's if you're not operational.

Additionally, PLS announced that it 'considered' lithium recovery is at 72%-78% (still low considering how long they've had) dependent on feed source.

Translated:
We don't really know the recovery rate currently, but we might achieve 72% if we use our best feed source.
Kind of like what happened in the met sample they sent off.

I consider you a fairly knowledgeable poster and adverse views are appreciated.
If possible it would be good to generate some responses about how people feel the economics stack up.

You have a 800m investment choice in AVZ or 800m in PLS/AJM.
There's risks in both i suppose - AVZ in getting that funding and producers in turning a profit at current prices.

AVZ definitely has challenges and securing offtake and capex is no doubt one of the main ones. Obviously PLS, GXY and AJM are safer bets in that respect as they are producing. But perhaps why AVZ trades at the price is does is such that the market (despite the hurdles) believes that IF avz overcomes it's funding and mine construction risks it's a much better chance of operating at profit to which almost all other hard-rock miners are struggling to do.

FWIW: I think PLS and AJM will survive in the absence of no other commercially viable mines (except greenbushes). So at the right price and if PLS shows improvement to opex cost i'd be interested. However, IMO AVZ is a real threat if it secures funding so i can appreciate the disdain of those already underwater (not suggesting you are). If you considered it a complete ludicrous joke surely they'd be no desire to comment. There's 25 odd other lithium stocks why single out this one? (genuine query)

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Hoping this post can remain as its supposed to be an educational comparison. I could post on the respective threads but my intentions is actually to not create a debacle on threads of stocks i don't own.

SF2TH