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drh65

1,379 Posts.

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19/10/22

19:08

Post #: 64285360
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Originally posted by nathanwoly ↑

Hi Everyone, here's my unsolicited 2c on what's going on at the minute...

Charts
Weekly view:

Looks like a healthy retracement is over and a bit of sideways chop is on the menu for a week or so.

Monthly view:

Same place on the RSI last run had another +240% increase to follow

We're wayyyyyyyy below previous run in stochastic RSI - which leads me to believe there's still a lot of juice left in this run with the the super optimist case of $15 share price.

The realist case in the short term is around the $7 mark I reckon.

Note:

$15 @ current commodity prices and current production is fair value on a very conservative EBITDA/MC ratio of 6:1...

More on that below.

FundamentalsSpodumene Price

All time high was broken on the lithium carbonate pricing

BMX has sold 5,000t at $7,800 SC6% equivalent (new all time high for SC6%)

Every reputable expert that is familiar with the lithium landscape is championing that prices will be "stronger for longer"

Average price for the most recent quarter likely $5,000 USD or more

Mines coming online are tiny compared to PLS (except for the likes of LTR which is like 2+yrs away and half the size of PLS)

Demand is only tightening with more OEMs ramping up, there will be more all time highs to follow

PLS Production & Shipping

FID complete for p680 with a slight nod to improve other plant in preparation for p1000

p680 likely on track for mid next year

p1000 likely to follow same time in 2024

Looks like we have shipped 160kt SC6% equivalent this SEP quarter with 1x container not accounted for yet

Sep qtr shipping is at a run rate of 640ktpa

Price x Production

The maths is simple... for the Sep qtr we're looking very least $800M USD ($1.2B AUD)

The current p580 annual run rate at $5,000usd/t is $2.9B USD ($4.3B AUD) per annum

The p680 annual run rate at $5,000usd/t is $3.4B USD ($5.1B AUD) per annum

The p1000 annual run rate at $5,000usd/t is $5B USD ($7.5B AUD) per annum

Valuation right now, near, and medium term

You can see below where we should be right now with current pricing - approaching the $9 range on a conservative day with (i) 6:1 EBITDA:MC ratio (ii) conservative operating costs at $650usd/t, and (iii) a slightly lower exchange rate

In the near term with p680 coming on line within 6-8 months, the valuation is well over $10 and with spodumene prices likely improving some more, theres no reason the SP wouldn't be around the $15 range

In the medium term with p1000 in a bit over 18 months, i see us easily flirting with $20 (if SC6% prices stabilize around where we are now).

PLS will be in the ASX 50 with all the indexes buying in. And likely improve to ASX top 20 bringing even more stability

Do I even have to say it?..... guys......Dividends soon.... Everyone living off super will want PLS (or more) after the first dividend payment.

REMINDER: I haven't prices in the obvious value that the following venture will bring: (1) POSCO JV will easily add $500M extra revenue at 30% ownership, (2) CALIX is Dale's baby, its likely to bring more value than POSCO, (3) with the cash on hand over the next 12 months liekly being in the $4B-$5B AUD range, there is likely M&A activity on the horizon, (4) Its currently exploration season, we could have another routine resource increase, and (5,6,7,8) I've probably forgotten a bunch of crap too.

Just look at how pretty this picture is

Anyway, DYOR and take care of yourselves.

Lots of love - Woly

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Nice work woly
PLS Price at posting: $5.08 Sentiment: Buy Disclosure: Held
13 Upvote

0 Great analysis

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