”Pleasingly, we have already made strong progress on construction to date at Goulamina, with development firmly remaining on budget and commissioning on schedule for first spodumene concentrate at the end of the first half of 2024.”
GL1 scoping study uses spodumene concentrate 5.5% Li2O price at US$2,500/ton, that's a very good price for long term assumption, SC6 will be at least 10% higher, around US$2,750/ton.
If LLL uses the same assumption, and LLL on the lowest ownership of 40%, LLL could generate around over $600m net profit after tax per year, for over 20 years, accumulated net profit after tax (free cash flow) would be $15B, compared with current market cap of $712m.
If SC5.5 at US$2,500/t is too optimistic, then uses very conservative one, SC6 at US$1,500/ton (at this price, most low grade producers would be struggling to survive, imo), LLL were still at 40% ownership, LLL could generate around over $370m net profit after tax per year, for over 20 years, accumulated net profit after tax (free cash flow) would be $7.5B, compared with current market cap of $712m.
Canaccord has a price target of $1.50 for CXO, $1.90 for LLL.
Macquarie views current CXO share price is factored in a long term (spodumene concentrate) price of US$2,500/ton.
If LLL used the same long term price of US$2,500/t, price target will lift to $4/share according to Canaccord.
Here's my exercise:
If based on long term spodumene concentrate price at US$2,500/ton, LLL's 40% - 45% ownership would generate between $684m and $770m for minimum 18 years, total free cash flow would be $13B - $15B over 21 years.
Versus Current market cap of $700m for LLL.
Here's my exercise for conversion calculation from lithium carbonate price to spodumene concentrate price (pure for exercise).
Lithium carbonate price peaked in China just over CNY600,000/ton, equivalent ~US$87,847/ton, SC6 ~US$8,366/t. Currently is still falling, at around CNY450,000/ton, lithium carbonate price ~US$65,885/t, SC6 ~US$6,145/t. If current price dropped by further 55% to CNY204,900/t (equivalent US$30,000/t LCE or SC6 ~US$2,515/t), LLL still could make $684m net profit after tax per year once the stage 2 online in around three years time. BTW, LCE at US$30,000/t, China lepidolite lithium producers would be struggled to survive as confirmed by three reputable industrial experts.
All imo, and always do your own research.
LLL Price at posting:
59.5¢ Sentiment: Buy Disclosure: Held
(20min delay)