Only catalyst I can think of is CATL opening their lepidolite mine. There is just too much negativity baked into the share price. Yes, debt is high, but there is a clear path to repayment. Yes, CE may not be with the company, but that has no impact on short to medium term performance. The next few years are pretty well mapped out operationally. Lithium price is within 10% of its floor, CATL can’t send it significantly lower without significant implications for long term supply. In any case, lithium isn’t making us money at the moment. Capex is reducing as Onslow ramp up nears completion.
IO price remains at US$106, well above forecasts would have had it. In 4 months’ time, by June, Onslow will be at full run rate. Assuming an average price of US$95/t for next financial year, Onslow will deliver AUD$1.5 bil ebitda in FY25/26. Mining services EBITDA forecast to be about AUD$820 mil in FY25/26. That’s $2.3bil EBITDA assuming the lithium price does nothing for the next 12-18 months.
Plus we get increased cashflow from Onslow initially as repayment for stumping up the cost of construction. We get another 300k from the sale of the haul road once full run rate is hit.
Its times like this your conviction is tested and make you question yourself and your analysis. Only time will tell but this is a high conviction pick for me and is reflected in my holdings.
MIN Price at posting:
$33.36 Sentiment: Buy Disclosure: Held
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