Not even a company like Allkem has the audacity to claim a stage 1 operation of 50ktpa.
Even with a world-class “angel tears” resource amd proven process, they are staging production for SDV at 15ktpa plus 30ktpa.
As others have mentioned, LKE is in the truth-telling phase, and the market is no longer satisfied with nonsense arbitrary aspirational targets without a clear plan to delivery.
Imo, everything points to LKE revising production plans, assuming everything still succeeds technically, to a far more realistic level for a “stage 1” of say 10ktpa. Brine projects currently under construction indicate that even this reduced scale of operation would take circa 2.5-3 years to construct, AFTER permitting, funding and FID are finalised. That would put commissionong at circa 5 years from today, assuming circa 12 months from later this year to receive all required approvals. Could easily be longer; look at the precedents.
What does the NPV of a smaller stage 1 operation look like…? I’m still finalising my modelling, but suffice to say a $1B MC is unrealistically high.
It looks like there’s going to be a drawn-out period for several years where “nothing happens” wrt significant de-risking, and imo the co will spend significant $$ trying to cut&paste “the plan” to other resource in an attempt to maintain shareholder interest.
The proof is in the pudding, and the oven is on low heat with a circa 5-year timer afaict.
Proof of commercial production success, including marking DD’s homework wrt energy, water, etc etc, is likely not until around 2028, assuming no major hiccups or dealbreakers along the way.
The “believers” still pointing to 50ktpa are led by hope instead of critical analysis, imo.
The NPV of a more realistic S1 doesn’t look pretty in comparison with the current market cap, especially considering the timeframes and remaining risk, afaict.
Not advice; those who love the “Aussie battler” and who “don’t waste time on reasonable analysis” should feel free to buy buy buy as many as they like. Or sell, or hold. DYOR and make your own investment decisions.
good luck
Imo
Dyor
LKE Price at posting:
63.0¢ Sentiment: None Disclosure: Not Held
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