I don't know about MC (which is obviously going to do extremely well also, for its remaining LOM) but lets take a quick look back at the PEA for james bay and see what it has to say about a $1250/tonne spot price FOR 5.5% GRADE mind you, so we could easily get an even higher price than that. But lets just work with the $1250 number for now because I think that's already enough sticker shock for most people.
The base case laid out in the PEA for james bay was a $600USD/tonne spot price. Under these assumptions, the NPV of James Bay's future cash flows were predicted to be approximately $330M USD, or about $445M AUD.
They also provided this handy infographic that says that every 10% increase in the spot price would increase the NPV of future cash flows by....$106M USD So thats for a 10% increase.....how much of an increase do we actually have though?
We have a 110% increase. So you would increase the base NPV of $330M USD by 106M, 11 times. That comes out to (330 + (106*11)) = 1.5 Billion USD, or $2 Billion AUD.
What was our market cap again? Oh right, $2.2 billion AUD. Wait, don't we own something else other than JB? Like, $200 million in cash and two other lithium assets? Our market cap is accounted for by JB NPV and cash reserves alone at this stage. Sure the share price has gone up, but it has a lot of catching up to do if it wants to keep up with what lithium prices are doing to our profitability... With this new price data I would put fair value for gxy easily over $10, and my old price target used to be $6.40
Going to be weird when I have to start thinking in mergeco price targets in a months time
GXY Price at posting:
$4.78 Sentiment: Buy Disclosure: Held
