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AVZ

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78.0¢ avz minerals limited

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ericson

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17/07/19

03:15

Post #: 39552574
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Originally posted by 8horse ↑

Lithium sector is repeating iron ore cycle, not many WA producers would survive at current lithium price.

"Mt Cattlin production unit cash cost of US$337 / dmt produced FOB, placing the project as one of the lowest cost lithium
concentrate operations in the world"

It's good news for GXY reduced cash FOB cost from March's USD$453/ton to USD$337/ton (1.39%/1.03% * 337/t = 454/t) due to 35% incresse in feed grade from 1.03% Li2O to 1.39% Li2O. But the Mt Cattlin Project’s ore reserve is 10.7Mt @ 1.15% Li2O. So the average mining cost of the Mt Cattlin project would be around USD$407/ton, plus average royalties and sale cost USD$100/ton, the total cash cost for Gxy's Mt Cattlin project would be around USD$507/ton which is reported as one of the world's lowest cost project.

PLS was reported by a SMM analyst, cash cost was over USD$700/t last year due to rampant production stage, was expected to be able to reduced their production cost between USD$450/ton and USD$550/ton. But PLS has 1.2% Fe2O3 which results in a significant discount to their sale price. Tatanlum is a niche market, It's unlikely to achieve USD$80/ton, a well known research pointed down it could head down USD$50/ton six months ago as more tatanlum are being produced by lithium producers.

AVZ does have a very high transport cost USD$223/ton, but site mining cost just USD$91/ton, total cash FOB cost before any by product cost USD$323/ton which is still very low. Tin by product is expected to reduce cash cost by around USD$50/ton.
Plus 4.5% roylaties, total cash FOB cost including roylaties is just USD$307/ton.

Before 5mtpa study results, I did a very conservative NPV calculation at USD$400/ton cost & USD$600/ton spodumene price, AVZ would be still very profitable.

Bear in mind AVZ grade is 1.65% Li2O and average thickness is 220m, also is premium recognised by Huayou.

China is trying to ramp up their production but very Unfortunately their domestic production will be Limited due to its poor quality of lithium projects which is very similar to iron ore.

AVZ share price has not moved due to various reasons as well as its ridiculous over 90% to WA lithium companies. Market isn’t convinced now which provides a good opportunity like FMG at early stage, imo.

DYOR.

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Great facts and analysis as usual 8. With a sp ad low as it is I appreciate your reminders of how cheap this stock is compared to its potential which appears to have no real barriers other than time and patience required .

AVZ Price at posting: 4.8¢ Sentiment: Buy Disclosure: Held
6 Upvote

0 Great analysis

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