They are commissioning a 3mtpa plant that has capability to be commissioned up to 4mtpa when additional capital is expended to meet demand at the time it is needed. And that incremental investment will not shut down the plant when moving to 4mtpa because this mob knows what they are doing IMO.
It is how projects are scoped and expanded. Pretty simple concept that some on here seriously continue fail to understand. Funding is there, just a question of whether it is needed when they pull the trigger to move to 4mtpa, including whether profit can fund the expansion to 4mtpa in its entirety.
Bankers gave money knowing full well that some aspects of the plant were to be built for 4 mtpa capability in the now, whilst some aspects will be built when the 4mtpa is required. I haven't read so much diatribe from some on here in ages. The DFS in 2021 and the ANN back in November 2023 around funding clearly indicated this as well.
Scaling up is not a large cost for each tonne of installed capacity for LTR to 4mtpa (from 3mtpa) as the base capital has been employed is my point, so it is about incremental investment.
In production SP is a function of EPS and P/E ratios and the P/E ratio one uses is from 10 to 20. So work out expected profit, divide it by shares on issue, and then multiply that by 10 or 20 and that gets you to just the SP for the 3mtpa facility. Then increase in SP from that is market's expectation of 4mtpa profit, and then from there speculation/anticipation/bet of any other potential further expansions by LTR (say into downstream processing) - market may also bet on takeover/revised bids etc etc as well, so SP at P?E rations for 3mtpa is simply the minimum SP p[ossibility, so profit is the key.
Resource size is important but not so much from an NPV point of view and how it adds to SP - it is what you produce or can produce in the next 5 years, noting in terms of resource size LTR's will increase from 156 mt because it will continue to explore in later years (just as PLS has done) - that underpins SP in production. Establish the operation first and deal with resource expansion later. LTR already have more than enough resource for their 23 year mine plan plus expansion to 4mtpa btw.
To repeat an earlier post on why you install some upfront capex to 4mtpa -
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What LTR is saying is that certain parts of the process flowsheet - i.e. the capex - have to be built at 4mtpa in the now because if you don't you are going to have serious problems in scaling up that part of the plant without significant and major shutdowns of the current operation. It is as simple as that.Project economics dictates that for parts of the plant they must be built at 4mtpa in the now - there will be other more specific capex that can be built when the 4mtpa facility is actually warranted because their adding to the plant doesn't impact the operation of the existing 3mtpa production (or what one refers to as incremental investment).In other words it is about downtime, lost production and recovery rates as to why you would scale some parts of the plant to 4mtpa in the now. It is not voodoo economics.At times I think engineering and process design concepts should be intuitive, but I guess maybe I am making some wrong assumptions and should have a VB to contemplate this point further.All IMO
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