Running discussion on SP, page-45707

SC6 rising a few times in the last couple trading sessions.
Up to $690usd/t average on the spot market.

Most historical DFS inputs for lithium developers are reflecting reality. GXY forecasted contract pricing to be $750usd/t in Q3. Looks like it will get there in a canter having rising almost $50/t in 2 days.

Thought it would be good to discuss the stock. 99% of posts are petty bickering of personalities - AVZ turning to mud. Well more mud than they were previously.

IMO market is factoring delays and CR hence the sub-par performance to sector peers. Upside re-rate will be on deadline met and that not eventuating. I injected my opinion on potential re-rate target post FID on twitter.

"Boils down to what the post-tax NPV is. IMO 50% of post tax NPV is fair value with finance secured. Assume they can land at say 2bn post-tax NPV with SEZ. If you take 75% ownership and 50% of NPV = 750M USD = 1BN aud. So yes I think that's fair."

Note the prevailing conditions of that assessment relies on the NPV as well as the ownership. 50% is a general rule of thumb but probably better assessed as a range of say 40-60% whereby one indicates a low and high side yard-stick for my assessment of fair value. Oddly or not that rough cut valuation would see AVZ re-test it's all time highs.

I'm more sceptical on the deadlines having experienced missed targets since 2017 (the market is probably similar, hence why if they meet some the market will likely mark up the stock). As i've said before yes not all deadline get met but having invested in 100's of companies AVZ is certainly below average and that includes other African operators so can't use that excuse either.

Irrespectively, idiosyncrasies aside it's a fairly simple equation. If they obtain FID (which means the BFS, permitting etc etc has all been achieved) and do so this side of 2022 there's a good ROI available IMHO. From there it would shift to construction and natural price appreciation will ensure as long as the prevailing fundamental which support the economics continue. If they don't then you can expect the S/P to head sideways when others are rising.

SF2TH