VUL has released its phase 1 DFS results. They will have a much higher capex than Phoenix even if production of lithium was the same because they are paying for energy generation and distribution as well but that doesn't contribute nearly as much in extra value.
E.g. as a split, Energy contributes just 0.4bill Euro in after tax NPV versus 2.1bill Euro for lithium hydroxide but capex is 657mill for energy versus 839mill for lithium hydroxide. The lithium revenues are Euro 616Mpa vs Euro 174Mpa for energy.
For phase 1;
24ktpa Lithium Hydroxide
Capex Euro 1.5bill = A$2.3 billion
NPV after tax Euro 2.6bill = A$4.02 billion (after tax NPV).
"potential to be one of the lowest cost operations"
Phoenix has an advantage of higher grade so could be even lower cost.
Phoenix has the added big advantage of the Inflation Reduction Act in the USA so can potentially be much lower cost again. I have no idea how much of an advantage this will be but it is expected to attract big investments to the USA so should be very significant.
I also understand that Phoenix may be targeting higher production than VUL's phase 1 production target, so NPV for Phoenix could be well above the 2.1 billion Euro (=A$3.2bill) after tax NPV of VUL's phase 1.
Also, if I'm reading the charts below correctly, VUL is contracted through historic binding offtake agreements to sell at around half of the expected price going forward. I wonder if that helped push the sp down 7% today? Phoenix might be at a big advantage there by having no forward sales agreements yet. A potential acquirer might look at that very favourably.
Maybe a $3.5bill valuation isn't so nuts after all, although an acquirer would likely want to pay much less than the after tax NPV.
Thoughts anyone????
