Banter and General Comments, page-14021

Hi GCar, I think your assessment is entirely feasible, but somewhat optimistic.

"Spend $100m in 2023 for S2 (mostly 2022-2023 profit from MC + S1)" - BMI are about as reputable as it gets in Li sector analysis; they estimate the following for spodumene pricing.


Based on BMI's estimate, 2022/23 would still see pricing at around US$550/t. If we subtract the current production costs of ~USD$400/t, and the royalties, etc at around USD$80/t, that equates to ~USD$70/t profit or ~USD$14m profit from Mt Cattlin per year (for 2022 & 23 at 200ktpa). If we trust the pricing assessment in BMI's estimate, years 2024-28 may see profit spike to ~USD$47m per year (at top end pricing - USD$725/t). These estimates completely ignore any further CAPEX, JB expenses and also HO expenses, but I'm leaving it that way just to keep things simple. So for now, let's say ~USD$14m annual profit for Mt Cattlin in 2023.

Moving onto SDV, ORE is currently receiving a margin of only USD$1310/t. Even if we double that margin to around USD$2600/tonne, that's ~$USD26m profit from SDV stage 1, and that's before we factor in royalties, taxes, additional CAPEX, etc.

So being generous and ignoring all of the additional costs, I see it as more likely that in 2023, GXY will achieve closer to USD$40m total profit. Drop a few million for HO and other costs and we're approaching close to one third of the $100m that you are estimating. Therefore, without a JV partner, I don't think GXY will be sufficiently funded for stage 2 development until around 2025/26. Stage 3 probably not until 2027/28. Obviously these numbers can all be thrown in the bin in the event that GXY signs a JV partner, goes into debt or conducts a CR.

SDV will eventually will become a highly profitable operation, but there may be a long way to go yet. I think by about 2028 we'll be sitting pretty, but personally I hope you are right and things improve quicker than what BMI have estimated.