Running discussion on SP, page-53934

Hey lads, Ive put together a simple comparison for AVZ v LTR, enjoy and critique. Both will be mined but looking to show how AVZ will be a monster NPV is 10mpta/hydroxide/PLS trains come to fruition. This comparison will be more accurate for AVZ and LTR when they release their BFS and DFS in the coming weeks to months!

Cheers

Miljew



Comparing LTR v AVZ operations and their respective NPV’s

First lets look at the table to ensure both are on the same playing field when it comes to costings

	$USD	AVZ (DFS .1.0)	LTR (PFS/DSS)	Price difference
1	LOM SC6 opex	$371	$377	$6
2	LOM SC6 price	$673	$739	$66
3	LOM LSM opex	$2,662	$2,649	$13
4	LOM LSM price	$7355 (known to be reduced ~$7000	$6,991	$364
5	LOM LHM opex	Shown in BFS?	$4,744	???
6	LOM LHM price	Shown in BFS?	$14,079	???
7	EBITDA	$380M	???	???
8	------------------------	------------------------	----------------------	------------------------
9	RESOURCE SIZE	401Mt @ 1.65%	156Mt @ 1.4%	N/a
10	STRIP RATIO	1:0:48	8:4:1	N/a

Figure 1

LTR original PFS showed a NPV of $1.12B AUD 100% ownership basis while AVZ shows $1.04B on a 75% ownership basis

If we take LTR scoping study and their NPV of $4.8 billion AUD with a lithium hydroxide plant, lets break it down and see their throughput to be able to compare to AVZ’s upcoming BFS.

LTR are looking at a 58,000t/a hydroxide plant which consists of 2 x processing trains. To feed this from their sulfate trains they will need approximately 2 x 45,000t/a primary lithium sulfate processing trains. This then requires 2 x 150,000t/a of SC6 or ~300,000t/a of SC6 which equates to about a 2mtpa operation.

Avz on the other hand are looking at a 10mtpa operation with 51% ownership with the rights to an extra 15% ontop.

A 10mtpa plant would require double what AVZ have currently planned, I.e 2 x (550,000tpa SC6 with 2 x 45,000tpa PLS trains) aswell as a hydroxide plant piggy backed onto the back of 2 out of the 4 PLS processing trains, much the same set up as LTR (minus the 2 extra PLS trains).

If this is the case being brought forward by AVZ in conjunction with CATH then we will easily see an NPV in excess of LTR’s $4.8B AUD IMO.

		AVZ	LTR
1	Throughput Mtpa	10	2+
2	SC6 Mtpa	1.6	0.3
3	Lithium Sulfate(3.33t of SC6 = 1t PLS)	4 x 45,000 tpa trains	2 x 45,000 tpa trains
4	Hydroxide (1.92t PLS = 1t of hydroxide)	2 x 23,437 tpa trains (46,874tpa assumption)	2 x 29,000 tpa trains (58,000tpa PFS)
5	NPV	???	$4.8B AUD
6	Ownership	51%(+15%)	100%

Figure 2

Note: LTR will have used up all their allocated throughput of SC6 to produce their end product of hydroxide, also noting they have mentioned a 2+ Mtpa throughput in their upcoming DFS.

AVZ will have 0.46Mtpa of contracted SC6 off-take left to sell/refine further (not forgetting CDL at 600Mt plus) .

-800,000tpa SC6 to CATH (includes yibin’s share of offtake)

-160,000tpa SC6 to Ganfeng

-180,000tpa SC6 to Chengxin

-Total of 1.14 Mtpa accounted for out of 1.6Mtpa

In summary there are a few other factors I have left out both positive and negative e.g resource expansion, sovereign risk and so on, but on a simple comparison and with reference to figure 1 + 2, LTR and AVZ are on an even playing field when it comes to opex/pricing. They are not an even playing field when it comes to the size of the 10mpta operation accompanied by a hydroxide plant at a 51% ownership (with an option of 15% extra ownership). IMO AVZ is worth over and above a $4.8B AUD NPV, which depicts a massive undervaluation which should be shown in the upcoming BFS.