Your post is factually incorrect and misleading to other readers. I will try to illustrate why.
Firstly, SYA do not need to raise 200m to build a plant. The plant they need to build will cost no more than C$60m (see Glen Eagle 43-101) – crush, grind and float. SYA product will be a 6% Li2O concentrate that will be sold into the Lithium Carbonate Plant. It is these plants that cost the 100's of millions to build, not a simple processing plant that SYA need. The product that comes out of the carbonate plants goes straight into the phones/batteries etc.
Secondly, addressing your statement around the lowest quality early stage lithium producer that needs to spend huge amounts of money on further drilling. 80% of the current JORC resource is in the indicated and measured categories with over 15,000 metres of drilling already completed. The resource is located at surface and is an easy, low cost, open pit operation. Within the confines of the open pit there are small pockets of extension drilling but there is not even any need to do these given the quality and definition already achieved.
Thirdly, since the company signed the deal, the Lithium Carbonate plant 50kms down the road has been purchased by the Chinese who are going to spend about 150m on it. History suggests that the resource they have has been problematic and with this just next door it is very easy to think that they will seal an off take agreement pretty quickly. It is easy to see that it may also have some strategic appeal.
Your understanding of the contained lithium value is also incorrect. You state $45m, when in fact it is over A$1.2 billion. 9Mt of resource at 0.96% Li20 = 89,000t of contained Li20 which in a 5.5%Li20 concentrate priced at say CAD$750/t (Galaxy Resources in last two quarters have stated prices at US$600/t for 6% Li20 concentrate. At US$:C$ of 0.8 = CAD$750/t) = CAD$1.3 billion in-situ value.
As for the 30m market cap claim it is much closer to 25m and you are not considering the cash that the company will receive for the options. If these are converted, there won't be another raise until the plant is required and depending on the bankable a level of debt would more than likely be considered.
But in the short term, compared to every other listed Li play on the market with a defined JORC resource this will look highly attractive - they paid $47/t of contained Li20. Look at Altura for instance trading at +600/t of contained Li20.
I hope this helps clear up the value proposition as well as some basic concepts in the understanding this project.
Cheers
CEM
SYA Price at posting:
3.7¢ Sentiment: None Disclosure: Not Held
(20min delay)