Ann: Pilbara Minerals Expands Ganfeng Offtake Agreement, page-122

From a front end we have a strong asset which is relatively shielded from market downturn because it is lower on the cost curve

The issue is a producing mining company at scale would probably have a high single digit P/E like 6 to 8 so for a $10 SP that means a minimum EPS of $1.25 to a maximum EPS of $1.67.

for easy maths - $1 EPS is around $3bn in after tax profit - meaning $4.2bn pre-tax earnings

Say the asset base is:

Spodumene Mine for 1mtpa
POSCO 30% JV for 43ktpa hydroxide plant
Unnamed JV for 300kt of spod - lets say similar to POSCO for simplicity but won't come online til closer to 2030

Calix JV - Value add + 7/8s of the shipping cost - baked into operating costs and I couldn't determine shipping costs from company docs but found this AFR article
https://www.copyright link/companies/mining/mineral-resources-smashed-by-iron-ore-price-penalties-20211026-p59342
the above quotes $13.55USD per tonne - assume 1mtpa $13mil USD - $20m AUD drops to $2.5m AUD so almost a $20m cost savings just from the boat shipping, driving to port would also have savings - but also a higher % profit could increase revenue - given lack of market data it is speculation to say what price it could fetch but if you do it on lithium% basis it could be a doubling of revenue compared to an ordinary spod sale but may not be used on all spod production and also isn't commercially proven so needs to be risk adjusted for that

in the current market it's not possible for PLS to get close to $EPS and a >$6 valuation

but if supply shuts down and we find a higher long term pricing because supply was stalled - but argument is insolvency causes cost base of capital projects to reset and debt can be cleaned for a low capex PPE for the new purchasers so could be restarted by new finance for less as a semi brownfield mothballed mine restarting.

As per last quarterly $1k AUD cost base for spod to get $1bn in profit on 1mtpa you need $2k AUD sale price would be $1.3k USD achieved pricing - spot in china is lie $1k USD I think +/- 10% in the 900s last I saw

Ignoring JV's, and loosely calculated you'd need $4k AUD sale price on the $1k AUD cost base to have $3bn AUD which is $2.6 USD realised pricing on a fully scaled up mine that won't come into play for a few years. Price has been higher so if a market upturn catalyst happens it is possible bc we have had pricing there but we need the mine scale up on foot and JVs would also help us along the way for sure.

LONG STORY SHORT: It is possible but it'd take a few years and a stronger long term market (> $2.5k USD Spod price) if JVs fully come online I reckon we could get there with $2k USD pricing assuming JVs come on line and are optimised well

I trust management and think they have the foundation to make it.