Well it depends how you want to value the "IP". Most here seem to tout the ability to produce battery grade lithium carbonate, rather than technical grade, as the IP. Fair enough.
But then if we want to value the IP off that measurement, it's pretty straightforward, just subtract the difference in price between battery grade and technical grade, and multiply it by volume. There's currently a USD$2,000 differential, so:
USD$2,000 x 1,550 Tpa = USD$3.1m annually for the current operation. USD$2,000 x 10,800 Tpa = USD$21.6m annually after the 10ktpa expansion. USD$2,000 x 22,500 Tpa = USD$45m annually after the 25 ktpa expansion.
The other issue here is whether the major players actually covet AGY's IP. Most of the M&A action is being instigated by existing large scale lithium producers, who already have their chemical processes sorted. Realistically, why would Allkem, Livent, Posco, SQM or Albermarle be interested? You could make the argument that AGY may be of value to a large scale spod operator who wants to diversify into brine (e.g. Pilbara Minerals, Sigma Lithium, etc), but I can't see any justification for large scale brine operators to get involved in an operation that is a fraction of their current business.
The main issue I see with AGY is scale. BY any objective measure, 1,550 Tpa over the next 4-5 years is pilot plant quantities. AGY need to get going on the 10 ktpa expansion, and they need to significantly expand the resource. Like it or not, the major players need and want volume, and AGY isn't in a position to provide significant volume right now.
AGY Price at posting:
31.0¢ Sentiment: Buy Disclosure: Held
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