Assuming DFS targets are met at current configuration, and without SEZ and VAT credits, I came to the following US$ based SP at 75% ownership at production noting obviously haven't looked at expansion scenarios either (i.e. others need to convert to A$ if want):
1. Using - 4.5 billion shares (refer workings in
Post #:47838373)
2. Using 3 billion shares on issue -
Post #:47839872
Obviously SEZ/VAT, increase EPS and P/E ratios, but outcomes are based on DFS targets coming in as derived. Again, note data above needs to be converted to A$. Some other base data here -
Post #:47421386 and
Post #:44177152As a matter of interest, in the past I have stipulated that spodumene prices are linked to hydroxide and carbonate prices. That is prices are determined by that relationship, and contracts are not generally on a fixed price basis. Looking at the data, right now spodumene prices are about 5% of the monohydrate and carbonate price, and I generally work on 5% - 7.5%. Noting, there are 7.5 tonnes of 6% grade spodumene required to produce 1 tonne lithium carbonate at a 90% recovery rate, and 6.5 tonnes spodumene required to produce 1 tonne lithium hydroxide monohydrate. When markets turn I would probably be expecting the relationship to be no more than 7.5 %. Further info pricing here-
Post #:51265995Sulphate pricing will be about 50% of the hydroxide price -
Post #:49911604Why - this picture explains a few things:
The picture is about vertical intergration not sales of spodumene to a converter, and then conversion but can be used. It also explains why companies prefer vertical intergration btw.
Using hydroxide, in the picture basically they are assuming a spodumene input price (based on cost of production) for lithium hydroxide monohydrate of US$323 per tonne (2100/6.5 tonnes). According to AVZ DFS a spodumene price of about US$674 per tonne is used, meaning if that converter bought the spodumene its spodumene input cost would be US$4381 per tonne of lithium hydroxide monohydrate produced before adding the processing cost. Doing the maths, hydroxide and carbonate prices must rise to allow for spodumene price growth (and sulphate price growth). Or in other words AVZ's price assumptions require hydroxide prices to be in the order of US$13,000 - US$14 per tonne. And finally good to see prices rising - always has been a key to viability for all grennfield projects
As a final point, a lot of discussion around the roadshow. I am finding the roadshow a bit of a distraction to be frank - nice they are updating, but I would have thought fully spending your time on getting your offtakes done is better, or if you are going to do roadshows do them personally with financiers or someone who can provide capital for your mine etc etc. Nice they are doing them, but this month and next are a key to meeting FID end June IMO to allow for construction to commence as a means to meet the 2002/23 production start date they want. So would have thought pure focus would be on that but that is me. But the summaries and updates were a nice read btw, but would prefer AVZ been fully focussed on offtakes, funding and FID next month or so.
All IMO
