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Funding - impacts and implications, page-48

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Anonymouse2

663 Posts.

112

28/11/20

12:14

Post #: 49208346
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Originally posted by Scarpa: ↑

Just to illustrate, if DFS variables come in and AVZ gets 75% of that it will get US$152 million per year in nominal profit (i.e. cash flow). Compare that to finance. Noting that the DFS itself did not include the SEZ or remittance of VAT. Also we are not even delving into expandability and economies of scale. Seriously does that poster think this outcome would already be fully priced into the current SP LOL. Obviously this is the difference between a confusion of assessing finance against NPV and actual nominal cash flows, because interest payments and principal is paid from cash flow btw

Obviously the key driver is demand and a supply shortage. Without these nothing matters. Ultimately it is about demand. Noting the sector itself has turned green, because I suspect the market is saying demand > supply, and prices will rise leading to profits, which then impact EPS and P/E ratios. In part SP now for lithium stocks is based on future earnings in the market, but this is more pronounced for brownfields projects than greenfields projects where the latter projects have not secured finance nor Offtakes etc etc If demand doesn't turn as I posted in the past that will impact all lithium stocks, including AVZ. Anyone wanting to know what impact binding offtakes have for greenfields developments, no need to look further than PLL and even visit historically what happened to PLS when it signed its first Offtakes before becoming a miner, meaning SP moves upwards etc etc. But ned a supply gap to emerge in the market.

All IMO

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So, the key with OT'S is they need to be BINDING.

I can see your understanding with the important of binding OT's @Scarpa, however many here dont, especially when linked with supply/demand.

OT's are likely to come for AVZ, they just won't be "imminent"

AVZ Price at posting: 9.3¢ Sentiment: Hold Disclosure: Held
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0 Great analysis

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