I share your sentiments Access 2020 and like you I am surprised little has been said. But I do believe its the principal driver to the smart money bailing. We do need to be careful how we interpret the IRR published. IRR is much more conceptual than NPV. We have no idea how they arrived at that figure - many ways to do it. They should never have published it. But you do have to take account of length of project. IRR does not address scale and does not give you real dollars. The formula assumes funds are re-invested at the IRR rate. I would not sell on what was published. I think they only published for comparison purposes between gas and urea. And i bet they are regretting publishing.
Which project would you support as an investor? Project A - 1 year life - IRR 20% or Project B with project life of 10 years with IRR 14%? - LCK DCF is over 30 years. I would support project B with a lower return over a greater number of years. That said i did ring Tony about the ostensibly low IRRs published. I said that i did not understand how the payback period can be 6 years on a 30 year project with an IRR of 14% - something wrong there - payback should be around half-way thru project at 14% - say 15 years - ceterus paribus - all other things being equal. Tony said he was not a finance guru but he was about to go into a meeting with CFO and would get back to me.
It was clear Tony is under the pump but he is very confident and upbeat about the low risk attached to the project - VERY IMPORTANT! He is a 'believer' with skin in the game. Thats how he came across. I liked the way he spoke to me. Forthright/honest/listened. I have clicked the buy button but there are other issues in this thread that need to be considered if looking to invest. Great thread.
LCK Price at posting:
22.0¢ Sentiment: Buy Disclosure: Held
(20min delay)