That valuation is way, way too generous. GXY had an end of life mine and 2 unfunded, undeveloped medium sized projects. I'd say the dying Mt Cattlin and the unfunded James Bay is equivalent to what CXO has, which has market cap of $2.5b. Mt Cattlin pays for James Bay and dies off, and James Bay is similar in size and scale to CXO, which is already funded and nearly complete.
Then we have SDV, which is a good quality resource, but nowhere near as large as the mega resource at Olaroz. Before the merger it was still unfunded with no construction. I'd call it roughly similar to what GLN has, which has a $0.4b valuation. GLN is behind on the timeline though.
CXO seems to be priced at a bit more of a premium than peers relative to its output and resource, $2b is probably more fair. And GLN is cheap based on its resource, $1b would make more sense. Of course I think both should be much higher, all lithium is undervalued, but we're comparing to peers, not what it "should be".
So that's roughly $3b, and any extra cash on hand would be going into funding James Bay. That's well short of $5b, I have no idea how you came to that conclusion looking at other ASX lithium companies.
Also you're valuing it over $1b more than LTR, which has a massive tier 1 resource, shorter timeline and full funding. No way GXY is worth so much more than LTR. Even if Mt Cattlin pays for James Bay and SDV, those two projects combined are not as good as a fully funded Kathleen Valley.
AKE has a bigger project pipeline and more lithium in the ground than any other ASX company by far, it'll take time to play out but we'll still be growing while other companies will have to start diluting themselves or blowing all their cash on takeovers. Spod is still riding high, but I think the market will gradually shift back to more refined chemicals once things settle down, and AKE is better placed for that than the pure spod plays.
AKE Price at posting:
$12.40 Sentiment: Buy Disclosure: Held
