The highest SC6 spot price was over US$8,000/t, now the lowest to US$1,000/t. For long term valuation, you can’t just use the lowest price to evaluate LTR. That’s obviously wrong. Just like iron ore price at US$39/t, crude oil price at US$20/bl, those prices are ~50% to 70% discounted to long term prices, and those low prices ONLY stayed for around THREE MONTHS, before bouncing hard.
BTW, lithium spot price dropped ~87%, which obviously will bounce hard, and long term price should be much higher than currently depressed price.
As I always believe, lithium and iron ore has many similarities, lithium is very likely to follow the iron ore cycle. Currently lithium cycle is almost identical to where the iron ore pricing at January 2016, FMG share price bottomed in January 2016, then its share price rose 130% by March 2016 as Chinese new year holiday finished in February (similarly this year, Chinese new year is in February. Only 2 days difference), rose ~250% in August 2016. Obviously iron ore price prediction by GS was doomed at US$38/t and US$35/t, but reality was, iron ore price hit US$95/t in 14 months, even insanely hit a fresh record of US$224/t in 2021, despite Chinese economy had been slowing down and big global producers production cost is under US$20/t.
Roy Hill was indebted with $10b.
LTR is only $394m to produce positive cash flow at SC6 US$1,392/t, if low price stayed for extra long, still has extra $366m funding available to use, totaling $760m is not really massive. BTW, both iron ore price and crude oil price stayed at very low level only for THREE months. LTR still 5-6 months away from production, by then SC6 is probably going up over US$1,500/t.
ALL IMO.
LTR Price at posting:
$1.36 Sentiment: Buy Disclosure: Held
(20min delay)