Ann: Quarterly Activities and Cashflow Report 31 March 2022, page-23

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Stu360

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27/04/22

13:26

Post #: 61044564
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Originally posted by Kiwisfly9: ↑

I know most of you have all seen this but for the benefit of any new traders here is some maths to consider if they are feeling a bit shakey about holding onto their shares right now and why its so important to hold on.

Spodumene according to all the major metals markets monitors is selling in the June Quarter for upwards of 5000 USD on contract. If we assume that this price remains stable (it won't, it will keep going because there is a global lithium supply deficit and it will only get worse) then the maths of the project look something like this.

190 000 tons of production a year
5000 USD per ton
Offtake agreements which will pay near spot price. I will assume 95% of spot price so 5000 USD per ton becomes 4750 USD per ton
441 USD per ton all in sustaining cost (this does not include royalties or corporate tax)
2.5% Royalties on gross profits
30% business tax rate (if we assume the Accountants don't find massive deductions and write downs which they will but lets just be super conservative)

That means we get 4750 USD per ton of spodumene we mine minus 441 USD per ton for the all in sustaining cost = 4309 USD per ton

4309 times 190 000 tons per year = 818'710'000 USD per year Gross
818710000 USD per year times 0.7 (to account for business tax) = 573 097 000 USD
573 097 000 USD times 0.975 (to account for 2.5% royalties to the Canadians) = 558 769 575 USD per year

Converted at todays exchange rate gives us 781'556'028 Australian dollars in pure profit.

Typically, future share value is based on a ratio of 8.5- 15 times EBITDA to give the expected market cap, which is then divided by the amount of shares on issue to give the expected share price.

558769575 times the conservative ratio of 8.5 is 4.75 Billion dollars
558769575 times the conservative ratio of 15 is 8.31 Billion dollars

4.75 billion divided by 1.71 billion shares on issue equals a share price of 2.77 AUD a share
8.31 billion divided by 1.71 billion shares on issue equals a share price of 4.90 AUD a share

***These figure does not include the extra money we will make from the Lithium fines that come from the crushing circuit which need to be added on top***
***These figure does not include the likely higher spodumene prices we will actually get by the time were in production***
***These figures do not include a potential doubling of production for a very small additional capital outlay***

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hello Kiwisfly9 what’s your thoughts on a divi in 2024 , I’m at 30 cents for the year at least.

CXO Price at posting: $1.36 Sentiment: Hold Disclosure: Held
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0 Great analysis

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Ann: Quarterly Activities and Cashflow Report 31 March 2022, page-23

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Ann: Quarterly Activities and Cashflow Report 31 March 2022, page-23

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