Was hoping to get some idea of what cxoers feel good about CXO compared to other Lithium stocks. But seems no one is interested in this subject or feel offended when someone said resource is small? Trying to buy more at the undervalue or simply not bothering to?
So I spent a little time on Sunday morning to do some research and found either CXO is very undervalued or PLS is very overvalued.
For someone feeling offended by the 'small resource', I believe resource is just a number. Greenbush's resource by itself can feed up the whole EV revolution. But in the end of day, it still all come down to how much and how quickly you can get the mine off ground as well as profitability. You can state very nice in JORC resource and DFS on paper while realistically you can not get the mine economically or even up and running. So I believe the best comparation right now is PLS (both are pure play with similarity).
Based on reading the recent Quarterly, though I think production of 80,000k per year is extremely conservative, I still use this to do the compare to give a reasonable result. For any doubt about CXO's cost, you can have a read of
@WhatsTheTip post
https://hotcopper.com.au/threads/banter-and-general-comments.5838196/page-34430?post_id=71238302 |
| CXO | PLS |
|---|
| 1 | Latest quarter Realised price per ton (USD) | $2,560 | $2,240 |
|---|
| 2 | Latest quarter Cost FOB per ton (AUD) | $904 | $747 |
|---|
| 3 | Production Guidance for 2024 | 80000t | 660000t |
|---|
| 4 | Sales Guidance for 2024 | 90000t | 660000t |
|---|
| 5 | Market cap | $566 Million | $11165 Million |
|---|
You can see, production and sales guidance of PLS is roughly l
8 times of CXO's. Cost is slightly lower, but sales price is lower too. As people may say the SC6 price is dropped to $1100 USD this week (Fastmarket), I would like to clarify I am fully aware of that. But this is the only figure we can know the comparable sales price of PLS and CXO. Even if SC6 price drop to $1000, both of CXO and PLS can comfortably wait for it to recover back to $5000.
So I strongly believe CXO should not be 1/20 of PLS's market cap. Especially during the oversupply of SC6 period (assuming it is true, I highly doubt it), small production is easier to sell than big production. So CXO should not get the discount, instead it is supposed to be
1/8 of PLS's market cap of higher. Eventually, the gap will be closed.
So my conclusion is I did the right move.
Just my opinion and please DYOR.
