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Yeah well I'm glad my money is with GXY and not PLS today.

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PedroG07

404 Posts.

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11/04/16

14:53

Post #: 17473478
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Originally posted by Backpackerparadise ↑

Galaxy1, usually I appreciate your posts. But this one was to superficial to be not seen as pure ramping. I prefer to have a look at the fundamentals to compare peers.

With PLS having 100M Aud$ cash in the bank are you serious making the assertion that PLS will require further CR's along their plant development? The outstanding funds required to get the site on line will be provided by off take partners in form of prepayment or through debt. Naming PLS shareholders "first time inexperienced investors" really made me laughing.
By the way, you as GXY shareholder should be aware of prepayments as GXY received sort of it from their off take partner for ramping up Mt. Cattlin (50% prepayment of 2016 contract value).

Given that GXY owns only 50% in Mt. Cattlin this will only provide an operating income/revenue of 18M US$ (60ktpa sold for 2016 delivery at US$600/t) whereas PLS base case (330ktpa spodumene) is expected to generate an net income of about 100M Aud$ in 2018 and 200M Aud$ in 2020 according to latest Beer and Co report which is based on US$ 400/t (!!) per tonne. Even in full production (120ktpa) GXY will receive only an operating income of 36M US$. PLS is aiming for an 3mtpa (maybe 4mtpa) and does provide great upside potential regarding the output. Also PLS plans to start mine construction at December with mining starting 12 month later. You can expect that the current CR was meant to get into production faster.

GXY has a cash burn rate of 3M Aud$ per year and net debt of nearly 20M Aud$, whereas PLS has 100M cash in the bank. The main value driver of GXY, SDV, is in the sage of DFS review which means that it will take years to get it into production (look at ORE and Olaroz). To secure financing for plant construction at SDV GXY needs to sell 20-30% of it to a JV partner (Tse stated in video presentation). Otherwise a big CR is on the cards. It will take years to get SDV in production, maybe too long to benefit from rising LCE prices. Once in full production SDV is expected to produce 25,000tpa LCE, PLS 50.000tpa LCE equivalent in its base case scenario (double absolutely possible). PLS numbers look by far more impressive.

Also PLS may benefit by one significant structural trend. This means that end users prefer spodumene over LCE because lithium hydroxide can be produced directly from spodumene, whereas brince can only produce carbonate.

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Yeah well I'm glad my money is with GXY and not PLS today.

GXY Price at posting: 36.0¢ Sentiment: Buy Disclosure: Held
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