Excellent post as always mate.
I've gone back through my most recent peer comparison spreadsheet this evening, added AVZ in seeing as they are now funded, and double checked the figures in all the inputs (let me know if I've made a mistake), and came up with a price target of >$3 as well (for the lithium alone).
See comparison table below:
Key findings:LTR & AVZ are trading at ~200% of their NPV's calculated from the figures & scenarios given in their most recent feasibility studies.
CXO is trading at >500% of it's NPV.
Whilst poor neglected FFX languishes at only 27% of it's NPV:
If FFX was trading at 100% of it's NPV, it would be $2.18 (this does not factor in the Morila Gold Mine or cash):
If FFX was trading at 150% of it's NPV, still a significant discount from its peers, it would be
$3.27.The Morila Gold Mine adds anywhere from $750M to $1.25B in value depending where the market values it (NPV derived & peer comparison derived i.e. WAF) plus $120M for the cash on hand = at least another
$0.75/share in value.
Therefore a price target of $4 is completely realistic in the short term. This analysis shows that there is a huge value discrepancy between FFX and it's peers. Here's what it looks like visually:
It appears that the market has finally cottoned onto this, hence the strong uptrend we've been in this past month. This should see us outperform our peers in the coming months as we catch up to "fair value" and beyond.
There are compelling reasons to invest in our peer companies for sure, but it just seems to be a no brainer that FFX offers the largest value proposition, with so much more room to move, just to catch up to our peers let alone as we build the mine, start generating huge EBITDA, lithium prices increase etc.
Which leads me to my next point, as I'm sure most people saw, AKE updated the market on Friday that their most recent contract pricing for SC6 is $5000/t which catalysed a huge sector wide run in lithium stocks.
It appears that Friday could be day #1 of a new wave in the lithium bull run which could see all lithium stocks break out to new highs in the coming months, as the paradigm shifts from ~$2000/t SC6 contract pricing to $5000/t contract pricing as the standard.
Check out what happens if I swap the $900/t contract pricing I have assumed in my model to $5000/t:
Now these valuations suddenly look far more conservative at this price point, and new investors jumping on board would be watering at the mouth to see just a 100% NPV valuation based upon todays current pricing, let alone the 200% NPV valuation precedent we have at the moment. FFX $40/share anyone???
Again, at $5000/t pricing, FFX is clearly demonstrated to be the best value opportunity of the lot as it is so leveraged to the lithium price, due to the size & quality of the resource, large processing plant, and lowest OPEX - all of these factors result in a multiplier effect.
Well done to the longs, it has been an incredible journey and it looks like this is just the beginning.
