2021 and beyond, page-6087

Let's try it again.
Comparing SLI and LKE is a good exercise.

1. Resources
SLI has 30% of the 3.14Mt LCE indicated resource of Lanxess project, i.e. only 0.942 Mt LCE.
Kachi has 1Mt LCE indicated resource of which 100% belongs to LKE as of now. Kachi also has 3.4Mt LCE inferred resource, again, with a current 100% ownership of LKE.
If Lilac will earn in 25% at Kachi, LKE will own 0.75Mt LCE indicated resource and 2,55Mt LCE inferred resource in Kachi, but LKE will have the pilot plant up and running at Kachi at a pre agreed high quality (above 99.95%), and would receive $50 million USD from Lilac at this stage. By this time most likely we will learn at least one off take partner’s name as well.

Red Cloud research only assumed 25.5 ktpa production in their DCF valuation model, this means that they only used a portion of the indicated resource of Kachi. Therefore your nit picking of why they included the currently only inferred resources in the table is completely irrelevant, because they didn’t use those resources at all for the valuation model of LKE.

This is the present.

Currently a 1,600m drilling program is underway at Kachi at 4 wells to support a conversion of resources to reserves for the DFS.Drilling will also enable the conversion of inferred resources to the measured and indicated categories.

2. Production plans
SLI plans to produce 20.9 ktpa LCE of which they will only own 30%, i.e. 6.3 ktpa LCE
LKE in Kachi plans 25.5 ktpa LCE of which they will own 75% even after Lilac would earn in, that’s 19.125 ktpa LCE

3. Market Caps

• SLI MC is $2.122 billion AUD
• LKE MC is $689 million AUD

4. Capex comparison
The Capex for SLI’s project at Lanxess in the PEA is $437 million USD
The Capex for LKE’s project at Kachi in the PFS is $544 million USD
LKE will likely have the necessary 30% part of the Capex by next June, and has earned the EOI from 2 ECAs already to finance 70% of the Capex.

5. My conclusion

• SLI is more advanced with the pilot testing, because they have it on the project site at industrial scale.Testing for LKE’s Kachi project is done at Lilac’s site in the US.
• LKE’s projects are in Argentina, SLI’s project is in the US, that’s a plus for SLI, but LKE has 4 more projects than SLI, that’s a plus for LKE.
• All in all, these differences balance each other imo, and so LKE is way undervalued compared with SLI imo.

LKE should trade at similar levels as SLI as of now imo, i.e. about 200% higher.