STRONG BUY, page-942

Vulcan announced a Lithium offtake with Volkswagen for c7ktpa hydroxide over 5y. So this is equivalent to something like 30% of the lithium need for only 1 of their gigafactories on Europe. Remember they are planning 6 gigafactories in Europe.
Also recall, VW aspires to higher manganese content batteries so this is key.
The readacross is therefore POSITIVE for EMN - which has the ONLY Mn resource in Europe.
The announcement is significant for us because:
1) It shows VW is FINALLY feeling a sense of urgency and getting active in securing their raw material requirements,
2) Plenty scope for more since, as I say above, this just covers a minor Li requirement vs its EU gigafactory plans - just a start and and they ll similarly need plenty of Mn
3) they have yet to take a direct stake in mining projects - something which their management recently reiterated is a probability.

As to the EMN valuation… The stock is significantly undervalued in my view. Stock is flat year to date yet Mn flake prices are 3x higher since.
More importantly, European manganese flake prices are c2.5x higher than those assumed in the company’s PEA.
if you adjust their published NPV number for 1) the much higher Mn price and 2) adjust down the cost of capital to 8% (from their assumed 10%) to align with where other battery metal projects use and 3) apply the buy back of royalties since, yoi get to an adjusted NPV of close to USD1.5bn (!).
meaning the stock trades at a mere 8% NPV.
This is a ridiculously low valuation; and see easily 3x upside in 2022- a key year for the stock when both pilot and demonstration plants will be operational paving way to offtakes; and new ceo appointment expected anytime now.
BUY