Hi
@specciemagee, so glad for you to come back to the discussions amongst shareholders. More than happy to share my views with you.
I think EUR is a lot more valuable than CXO.
Obviously CXO right now is intrinsically more valuable, due to the fact the company has entered production. The company is making revenue. It is a lot more easier to quantify and qualify the value of company, not just solely based on its assets but it's profitability. Also it is an open-pit mine.
EUR/CRML just based on Wolfsberg project, will unlock its value over time. The fact that a proposed hydroxide plant is in Saudi Arabia means OPEX will be considerably low and margin therefore would be considerably higher than other same companies. It is not simply having secured source of material - lithium is not like iron ore or gold. There are downstream chemical and engineering processes, and a hydroxide plant is just one... but I would argue THE most important part of the value chain. I believe Elon Musk mentioned something similar of late?
Why is Saudi Arabia a point of differentiation? Chemical plants are toxic. Most other advanced economies/jurisdictions (except China) avoid this part of the value chain (same with rare earth with hazardous materials like mercury and uranium) because it takes climbing mountains to get over the environmental standards required to commission and subsequently operate. Saudi Arabia, being a kingdom, well, what the King says goes - hence why I just say, Saudis just buy what they want when they want them. It's not necessarily because they are richer than us (Aussies) but because they have less impediments to achieve the same outcome.
CXO is a good company. They can definitely expand and perhaps even change my view that their assets are more valuable, in the future... if further acquisition, further expansion of known JORC resources, added value such as hydroxide plant, etc.
But based on hydroxide plant alone, CXO will struggle with added value downstream, even if a JV with a Japanese or South Korean firm, due to both CAPEX and OPEX, in addition to environmental requirements (and more cost and time). Even Lynas is struggling with their chemical plant in Malaysia - protests as well as OPEX. CXO is already getting in trouble with their water pollution from their open pit mine - it's also more costly in the long run (if environment is considered but it almost always don't so it ends up cheaper to just leave the mine post extraction) vs underground... but I digress - do look up the difference though.
CRML is doing solid work on addressing environmental concerns, current and future. CXO... limited. Good luck asking the company and their shareholders to cop the cost to fill the hole in the ground once they are done with the site.
At the end of every project or company story, it is the profitability that counts. It is the dividends that investors look for (or should be looking for). The income. The gross margin that gets their market capitalisation value higher. Afterall, what's the used of having a billion dollar revenue if your cost is twice as much? This is why tech companies are valued at such heights, CAPEX is high but due to low OPEX their margins are very high for years to come. Tesla is the same, very high margin (although I believe their reducing cost of EVs eating up their margin, which in turn why their share price is going down... but they see themselves as a tech company and will make up the bulk of that profit in software).
EUR/CRML will stand tall higher than CXO in my opinion. But give it time.
Attached extracts to support my views shared on this post.
