Ann: Mineral Resources Shareholding in Essential Metals, page-76

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Joe1974

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18/04/23

14:36

Post #: 67334665
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Originally posted by paulgf: ↑

I did my own similiar sums on this yesterday figuring Min would process this feed in their own plant , so 2ics logic is very sound . I am suspicious but that whole dfs was done to get the result the board needed to justify recommending the takeover. I think the Opx figure was cooked at 1030 per tonne . If Min is buying the asset but like the capex figure it’s irrelevant as lot of opex savings from feeding it through Mins plant and not trying to run it through a relatively small plant which only makes it far dearer .

The problem with the dfs as presented , if the numbers are truly what they claim are , you wouldn’t proceed on that basis , you would do dso , cut your capex and way lower your Opx and just take the pain in the revenue equation. Then as you firmed up more resource , produced some cashflow you might consider building a plant down the road if you’re firmed up more resource . So I would argue preparing a dfs on this basis is a bit silly . It’s a baseline yes but not probably the strategy you would follow in reality especially after getting these outcomes .

The other number I think is way to conservative is 1500 per tonne for spod . I laughed out loud when I read this in the dfs . What people are not appreciating here is the market in China is now bifurcated . Quality spod that can be pushed into higher density batteries via lithium hydroxide will continue to get a premium over lithium coming via lepidolite getting pushed into lithium carbonate .

The artisanal lepidolite producers need way more than 1500 to remain in business and arguably they are the swing producers in that channel . But as already mentioned if market is bifurcated now ,even this is to some extent irrelevant . Chris Ellison would be working on any spod he gets from ess selling it for 3000 + . You redo the sums based on this added uplift as well as capex and Opx savings and you quickly realise this asset has over a billion dollars of potential value to Ellison and min res . So if they go up to 75 cents to 1 per share the upside is still massive to Min Res .

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I totally agree with @paulgf.

I think ESS must have some of the most clueless investors/traders on the ASX as shareholders!

Why would you be selling this stock now so cheaply when you have two big gorillas at the beginning of a takeover battle?? Clueless.

Be patient and wait for this thing to pop to 80c and then ultimately +$1. The value of the rock in the ground has a conservative NPV of well over US$1 billion when you apply a reasonable spod price.

And for those that are speculating that MIN may be interested in a JV, WHY THE FARK would they do that? They want all the rock, not half of it. They can have it all for chump change to them. There is absolutely no commercial sense to a JV.

Sit tight and ride this gift all the way home.

ESS Price at posting: 51.3¢ Sentiment: Buy Disclosure: Held
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Ann: Mineral Resources Shareholding in Essential Metals, page-76

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