THanks for the tag, and apologies about the late response. People may have noticed i've been absent across all socials and stocks in general. I'm currently heading the construction and operation of a greenfields project which is taking up 15/16hrs of my normal days. Fairly well limiting capacity outside for stock related analysis to be published.
I have reviewed the OFS fairly cursory but well enough to know what i think and i'm very pleased with the outcome. NPV was higher than I had expected.
Regarding SC6 price conversations here, frankly i'm quite tired of discussing it. It changes day to day. It changes from analyst price decks, it changes from spot price and contractual and it changes from whatever company decides to put into their assumptions.
Long story short 20 different companies can have 20 different pricing inputs. It's not a fixed target. You can never please everyone. You either slide up the upper end of pricing and you're labelled as pumping. You slide too low and you're seen as being too conservative.
If there was pricing on a scale of 1-10. 1 being bearish and 10 being bullish i usually prefer to be sitting at 4. I prefer this because I can easily input different pricing and perform the sensitivity analysis. I like the figures being conservative on paper knowing that if the commodity ends up more bullish in reality my investment will only improve. So PSC is already one of the best if not the best MC to NPV projects for development phase and is done so on lower figures compared to peers. Outstanding outcome and decision IMV. Key IMV. Others will have their own but hey LTR used very high pricing and it really doesn't change markets perception too much. Big money can easily do the sensitivity analysis and determine NPV's across the developers and give them the same pricing input to see where they lie.
The key for PSC is that our post tax editba is excellent in comparison to our MC. The capex is not that high really at all considering and hence a very attractive IRR.
Why has the market not responded? IMV is the sell the news ASX casino. Anyone who hasn't worked out that the market generally sells the news hasn't been investing that long. As i've said many times. Prices go up if the news exceeds expectations, news goes down if it doesn't. The doubling of the price of PSC in recent weeks was the markets presumption of an improved NPV and hence when it arrives it seems about right.
TBH anytime you don't get sold off into, it's a great outcome as it means there's a balance of buyer to sellers. If PSC didn't have 7 funding offers and wasn't expected to have FID finalised in the short term i too may have considered de-risking.
But the lithium price continues to rise, and PSC is close to finalised FID. I indicated previously that i believe PSC has a good change of being bought out prior but more likely post FID. Maybe in Q1. Start of Q2.
I had suggested that I would look to free-carry at that junction but not before FID. This is why the price is holding and why i think it can rise again in the lead up to that news being released.
The terms of the deal will dictate the S/P from that point onwards. i.e. you factor the impacts of dilution dependant on the financial deal in terms of an EPS. We are very low MC to NPV and very low MC to ebitda so this is extremely robust in production. If a free-carry (now up 600%) I intend to rebuy the entire amount somewhere before production as if the S/P stays anywhere down near $1 it will be very attractive. EPS has this at multiple dollars and that's not considering any other projects they may acquire. I naturally just expect the market to lose some interest post FID and will re-jolt somewhere in the construction phase.
The only time i've sold PSC shares, was when i was building a position based on same risked capital back when it was 10-16c (declaring those ahead of time). I've not sold anything for a long time and certainly not intending to sell anything until FID is done. Even then if the S/P doesn't move from here, i probably won't sell anything, as we've now moved to a very small fraction of MC to NPV. Post finance 50%+ is normal. We are halve that.
Team message me to discuss the OFS. Simply told them it was a fantastic outcome the fact i have nothing to discuss suggests as such. We will see what comes, but looking forward to them getting this project financed, i'll then reconsider capital allocation.
SF2TH
PSC Price at posting:
66.0¢ Sentiment: None Disclosure: Held
(20min delay)