Here's a couple of points to ponder re AGY and its potential future:
BG Li2CO3 is currently selling for circa $30-40k/t, with spot sales closer to $70k/t
Production costs are circa $5-7k/t
Say 12ktpa x $30k/t margin = $360M pa
...at 12ktpa, AGY will own 90% of Puna Mining SA, therefore AGY's share of this margin = circa $325M pa
(USD)
AGY current market cap = AUD$515M = USD$362M
Convert (reduce) this AGY margin scenario ($USD325M) to earnings for a P/E roughy, and the P/E is somewhere less than 2 at the current market cap.
Some might question the P/E vs NPV valuation methodology, and rightly so, but imo there is a LOT than can be done wrt growth and expansion when you're making hundreds of millions per year!
So, imo there is very significant upside from here if we can get to 12ktpa and the prices stay relatively strong.
So.....DYOR on those two points; i.e.
1/ Can we get to 12ktpa ..?
2/ How is the med-term pricing looking ..?
Something else to ponder:
Production of BG chemicals has no reliance on downstream converters to produce the product that battery/component co's are after... A potential shitfight with China would have less impact on our product/demand etc when compared to spod.
Production of BG chemicals is far more complex than mining and concentrating spod; barriers to entry are very high, there is less chance imo of new entrants (new significant competing supply) with Li brine chems compared to spod miners.
Btw, that's not to say that companies like PLS won't make big $$ and be good investments, but DYOR on the potential returns vs risks vs your individual risk appetite and investment horizon!
DYOR!
AGY Price at posting:
38.0¢ Sentiment: Buy Disclosure: Held
