Speaking with KP earlier this week on other concerns, and Ewoyaa was highlighted by KP as value not being attributed given to PLL share price.
Ewoyaa is the hard rock project in Ghana (updated scoping study outlining a US$789M NPV) that PLL will acquire 50% (net 45% after Ghana Gov't free carry) of in a staged investment plan. This was originally communicated to the market on Jul 2, 2021 as PLL investing in Iron Ridge Resources ... now known as Atlantic Lithium (ALL).
Source docs
https://app.sharelinktechnologies.com/announcement/asx/9762fe5ae9033196d90c6a443b7d19b9https://www.atlanticlithium.com.au/s/Atlantic-Lithium-Presentation-January-2022-2-Final49.pdfhttps://libull.us17.list-manage.com/track/click?u=9a8c41f471f338217d776887e&id=0d986aad91&e=25d9f39c21Some project metrics
which is going to cost PLL
Now I will say this and move along. I don't care if PLL does a secondary or placement of say 15m shares to raise US$70M. Putting it really simply its paying US$70M to get 134,550 tpa of SC6 (45% of 299,000 tpa of SC6).
This is as good a time as any to try and figure out what that's worth. Currency is US$ and I'll use Rodney Hooper's valuation as follows:
1.
"Peer projects under construction are trading at a price to net present value (P/NPV) ratio of 0.8 or higher." On that basis Ewoyaa could be valued at 0.8 x $789 = ~$630M and PLL's 45% share = $283.5M of EV to PLL.
2. Current share price of ALL is in pence at 31p and 573.7m shares outstanding puts MC = ~GBP178M = ~US$242M but they also have ~$40M in cash ... ALL V is ~US$200M ... so arguably 200/284 or about 70% of what RH metric suggests.
3. More interesting is RH's view wrt what a Chinese non-integrated would pay to acquire the remaining offtake. RH suggests US$500M to acquire that on the basis of <4% debt vs 8% NPV and that computes to ~$800/t long term SC6 cost (which is way below current spot). He uses 8t of SC6 to get 1t of LiOH with an all-in cost of $12,615 ... and 15% margin puts them at US$14,500 as say "marginal producer". US$500M equates to ~ 65p
Anyway up to reader to figure out if PLL share price reflects any value for Ewoyaa. Don't forget PLL also owns shares in ALL... 54M shares which at 31p is ~$23M and at 65p its $47.5M ... so keep that in mind if you fret about CRs. Asset accumulation and balance sheet strength
The other thing one should do is some sums wrt to our economic interest in the Abitibi project and then what SYA paid for Moblan (US$86.5M for 60% of a project with NFI of NPV).
Hope that was useful.
(20min delay)