Stockmonkey, so a known reserve of 70M tonnes of spodumene out of a total resource of 150M tonnes that will only cost a couple of hundred million to build, yet on a very conservative basis 6 tonnes of ore =1 tonne of spodumene concentrate that gives us just $A300 profit, in an atmosphere of 1.5% interest rates and low inflation, means the total profit mining the 150Mt, or 25Mt of concentrate at just $300/t profit a total of $7.5B in profit is overpriced at $600M.
This in a commodity that a blind man can see it's use going to grow at a rapid rate over the next 10-20 years at least, so the super conservative profit of $A300/t is actually unrealistically low.
How much would you value such a project?
IMO the current method of using a DCF and using 8% or 10% or whatever is just ridiculous, as we are in a low interest rate world, with low inflation and any discount on future profits should be way lower. Our actual profits are going to be way above $A300/t in the next year or so, probably 4 times as much, and unlike MacQ bank that think the world will have a 100,000t surplus of LCE by the middle of this year, I think the world will be scratching around for every tonne of LCE because of shortages, and everything that comes online will be gobbled up.
Financing is not going to be a problem, especially with 11,000 shareholders and a worse case scenario raising from us at less than $15K/shareholder. So zero problem there.
The final permits are not much more than a formality with all the biggies signed off, so it is only a matter of time before the profits start flowing in and the SP goes up, and keeps going up as our likely selling price of closer to $A1200/t will give a much higher profit than the $A300 I have allowed for, closer to $900/t and maybe even higher.
So even at the absolute worst case I can see where there has to be a cap raise, with a free attached option to give more cash in about 18 months for expansion, and with say a worst case of 2B shares, then the $300M in cashflow will make us worth at least $4B before expansion to the 4Mt/a plant, and the cash to follow up our downstream plans as well as the expansion to 4Mt/a.
That in turn will increase profit greatly to well in excess of our current MC, and make the SP go to 10X where it is now!!
That is the worst case scenario!!
I have just talked myself into the reality that we are so undervalued, IMO, I'll be selling some crappy shares and buying more tomorrow!!
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