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ESS essential metals limited

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Hi Bluegoose, if it goes thru as is then it’s probably still a...

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Names little

19,346 Posts.

1474

12/05/23

14:37

Post #: 67745447
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Originally posted by Bluegoose: ↑

gberra / Names little,

You guys are quite correct. The EUR scenario seems too good to be true, and it might be. But if the vote passes at SZZL, they will stump up US$150M or something like that for 20% of CRML (hence the US$750M valuation), or less on a pro-rata basis. SZZL holders will have skin in the game.

To be honest, even if the vote fails and the NASDAQ listing doesn't eventuate, EUR have some nice things going on to more than justify their SP including an offtake with prepayment from BMW and an MOU (soon to be binding??) for a Hydroxide plant in Saudi Arabia. So miles ahead of ESS in terms of off-take and development.

In any case, I was not trying to cross-promote, merely giving an example where management (and their potential partners) are valuing a very similar sized asset at many multiples of what Tim and our management are valuing Pioneer Dome. Food for thought!!. Value is in the eye of the beholder!!

And Names little, you have hit the nail on the head. The NASDAQ and NYSE are valuing their Lithium companies at 2 to 3 times what the ASX are valuing our local Lithium companies based on forward earnings and PE ratios. So you are spot on in that the ASX in my opinion is grossly undervaluing our companies and is quite "inefficient" in this regard".

Case in point. AKE have just announced a "merger of equals" with Livent which is listed on the NYSE. Livent trades on something like 6.5 X 2024 earnings. AKE trades on say 3.5 X 2024 earnings. Hence if the merged entity in due course trades on say 6 X earnings (including AKE profits which are larger than Livent), then AKE will have effectively doubled their P/E ratio and relative share price. Now it remains to be see if this eventuates (and will probably take 12-18 months to play out), but it's likely a big factor in why AKE were keen to merge with a US company and gain exposure to a US index. The market has already reacted favourably to the deal also - pushing up AKE some 15% or more already.

Back to ESS, I'm not unrealistic, and I'm not even seeking $1+ for our asset.

But I do think it's not too much of a stretch to achieve say 70-80 cents for our shares with a quick sale to MIN and be done with it. I'm sure we can then all find a good home in the Lithium market for those funds and keep our investments growing!!.

I own a lot of Lithium stocks (and have done so since 2017) and I have learned a lot and done quite well so far. Hence I see great opportunities to use ESS funds on companies with great management. But we all deserve a decent price for our ESS shares before cutting and running.

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Hi Bluegoose, if it goes thru as is then it’s probably still a good deal, though I think your USD 150m has now been reduced to USD 44m and The US fund ends up only owning about 13% due to all the cash withdrawals from the fund. Not sure why anybody would have left their money in the US fund to be honest, perhaps laziness or not understanding the deal. Given the level of withdrawals (approx 2/3 of funds) it would seem that most of the fund investors didn’t think it was a good deal for them.

Anyway all the best with it, be intereresting to see how it goes but either way given the low level of US investment (USD 44m for approx 13%) I don’t think that can be used to determine a valuation of the other 87% or then a comparison to ESS valuation. Pretty much most of the US fund holders cashed out their money and walked away.

But it would be interesting to see how it then trades on NASDAQ, what sort of valuation it gets.

Thats my reading of it anyway.

ESS Price at posting: 47.0¢ Sentiment: None Disclosure: Held
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