rincon current valuation

i agree 67c was running a bit ahead, but imo it should be closer to 40c now

the report has many flaws

by far the biggest was the A$86m NPV they attributed to Rincon Salar. this is ridiculously low. clearly they have no idea how to do an NPV.

Lithium price = $US6000 per tonne
Gross cashflow margin = 75% = $US4500 per tonne
Full production = 17000 tonnes p.a
Total gross cashflow = $US76,500,000 p.a
Tax rate = 30% = $US22,950,000 p.a
Net cashflow to ady = $US53,550,000 p.a
Long run AUD/US exchange rate = 0.8
Net cashflow to ady in $AUS = $66,937,500 p.a

We all know Rincon is replenishing, so assume infinite mine life @ WACC of 15%. Assume full production achieved 2 years from now

So NPV of Rincon 2 years from now = 66,937,500/0.15
= $AUS446,250,000

Subtract capex (assume US110m = AUS137.5m)

Net NPV = $AUS308,750,000

NPV Rincon now = 308,750,000/1.15^2 = $AUS233,460,000. Compare this to State One's 86m

Assume 1bn shares on issue, gives current NPV per share of 23.3c

This is a conservative valuation that assumes long term lithium price of $US6000m and no ramp up of production.

Also it places no value on iron ore or potash cashflows

Given the very high lithium margins (75%), the real value of ady lies in ramping up production

IMO ady should be trading at about 40c now.