ASX Today, page-35846

LTR is an excellent company and one day will be on a par with PLS. However the current weak SC6 price is reducing its FCF which directly affects its valuation and hence the share price. Hence I have had a look at what LTR's valuation is at various SC6 prices.
Assumptions:
1. LTR produces a SC6.0 product.
2. All sales are sold into spot market under the umbrella of offtake agreements.
3. Production = 613kt pa SC6.0
4. AISC = A$936/dmt
5. Valuation methodology: Free Cashflow (FCF) multiplier = 10 times
6. Valuation = (FCF x 10)/Number of Shares.
Valuations:
1. SC6 = US$1000. Valuation = A$0.74
2. SC6 = US$1500. Valuation = A$2.04
3. SC6 = US$2000. Valuation = A$3.34
4. SC6 = US$2500. Valuation = A$4.64
5. SC6 = US$3000. Valuation = A$5.94

The powerful feature of LTR is its high production volume. A small increase in the SC6 price produces a substantial rise in FCF and hence its valuation. This makes it a very attractive investment in a rising SC6 price environment. Unfortunately the opposite effect occurs in a declining price environment which we are currently experiencing.
Hence the reason I am currently short LTR. As soon as the SC6 price starts to twitch upwards I shall turn and face in the opposite direction.