CXO (ASX) $1 party

Originally posted by tacair: ↑

Thanks @tiramisutiger,

It is worth remembering that PLL is not an approved project. CXO has the added benefit of actually being able to commence producing in the near term which means it should be a much more attractive investment.

I had a look over my last NPV analysis which was based on the June 20 Announcement (https://wcsecure.weblink.com.au/pdf/CXO/02249521.pdf) to see what has changed since then. CXO hasn't released any new financial data but the upcoming DFS will provide some more clarity when we see it. Based on the financials in that announcement, I came up with an NPV(10) of 232m. Based on the current SOI, this translates to a SP of approx 24c based on lithium alone and what we knew in June 2020. To this we can now add:

1. Increased reserves (to be confirmed in the upcoming DFS v2)
2. Increased annual production (to be confirmed in the upcoming DFS v2)
3. Lithium Fines
4. Gold potential
5. Silver potential
6. Copper potential
7. Uranium potential

Put all of the above in a world where quantitive easing is becoming the norm (meaning that there will be increased pressure on property and equities and an attempt to decrease the AUD to make exports more attractive in 2021), a commodity super cycle beginning, recovering lithium prices and investor interest, very cheap finance (almost free), the EV revolution and CXO has some massive potential to materially exceed the SP suggested above.

In addition to the above and for anyone reviewing the forum as part of your due diligence, below is a list of the major strengths of CXO as I see them:

1. Excellent logistics (no FIFO, no mining camps, short runs to port/essential services etc etc).
2. Superior cost per tonne (approx $300).
3. Declared 170,000 tonnes production output with a current consideration to increase with the DFS.
4. very low CAPEX (~85M AUD).
5. 75,000 tonnes of output binding (Yahua - now suppling Tesla), 50,000 non-binding (Transamine), 20,000-30,000 non binding (Xinfeng) - we have a diversified customer base.
6. Good recoveries.
7. Excellent Grade.
8. Updated DFS to come with likely +7MT of reserves which should amount to approx NPV of 280-300m (SP of ~30c and covers lithium only, the resources above will only increase this).
9. Additional off takes to come (likely only room for 1 more based on current numbers but depends on production increase in the updated DFS).
10. Finance to come at a time where the sector is turning and money is very very cheap - no A40 or AJM issues. There is also a current de-regulation program for the NAIF of which we have an open application.
11. A strong management team that despite the downtrodden sector over the past few years have managed to keep ticking all the boxes to get the project approved - their communication is improving as well.
12. Key approvals (environmental/government) granted with BP33 to come soon - this is a significantly undervalued point and is a key risk for all projects that don'thave it.
13. Stable political region that desperately needs jobs at the moment.
14. The project has NT government support with the commitment of the 5m jobs fund.
15. Improving lithium prices.
16. Demand of EV's increasing and we haven't seen the effect of post COVID realisations yet (i.e. India being able to see the Himalayas for the first time in a decade - this had to have a profound effect on the populous).
17. SOI of 980m - still relatively small for a junior developer.

GLTA, the next few weeks/months should be very exciting!

Expand

@tacair, great analysis here and thank you for your contribution to the CXO threads. Given you have sold at the peak, do you see yourself rebuying into CXO? Having looked at the preview gold results, on a conservative estimate, what do you think the SP will jump to on positive gold announcements? Personally I think 30c is a minimum off the back of conservative positive gold news, would love to see what you think.

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(20min delay)
Last 9.5¢		Change -0.003(3.06%)		Mkt cap ! $203.0M

Open	High	Low	Value	Volume
9.7¢	10.0¢	9.4¢	$1.266M	13.10M

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