Good morning @stantrent,I'm surprised by your surprise at the...

Good morning @stantrent,

I'm surprised by your surprise at the lack of challenge to a valuation below $30 million for the Rincon resource. I presented three clear examples for comparison with peers to illustrate Rincon's value. However, it seems you overlooked or disregarded them in favour of simply stating a $1 billion valuation for the project. That's perfectly acceptable, but let's remember your earlier comment urging a logical discussion about Rincon's worth. Yet, when provided with peer comparisons, you ignored them and shifted the valuation criteria once more to include the value of the MRE and EIA. Fair enough though, as I have a relevant peer comparison in mind: Pastos Grandes, owned by Lithium Argentina (LAAC).

Pastos Grandes, situated in the same province as Rincon (Salta Province), holds an existing EIA approval for a 24 ktpa conventional evaporation pond project, similar to AGY but double the size. Its MRE totals 4.918 million tonnes LCE, which is 7.17 times larger than AGY's Rincon resource. With a higher grade of 439 mg/L compared to Rincon's 329 mg/L, the contained lithium resource at Pastos Grandes is nearly ten times that of Rincon. LAAC, the owners, have demonstrated their capacity to run large-scale operations and are currently scaling up production at Cauchari-Olaroz, reaching 50% of nameplate capacity in around six months.

Effectively, both projects offer similar benefits, but Pastos Grandes has an advantage with a DFS in place, unlike Rincon. Just six weeks ago, Pastos Grandes secured a US$70 million (A$106 million) strategic investment from Gangfeng for a 15% stake in the project, valuing it at US$467 million (A$711 million). Adjusting for Rincon's smaller size and grade, this suggests a valuation of A$71 million, far below your $1b suggested valuation. And remember, this valuation comes with a DFS, an EIA for an operation twice the size, and strategic investment attached. It's important to remember that AGY's Rincon resource is among the smallest and lowest grade measured resources in Argentina. From a resource perspective alone, it would not be at the top of anyone's acquisition list.

You are welcome to devise your own valuation, but ignore peer comparisons at your own peril. Unfortunately, dismissing peers seems to be a trend here, where many investors prefer focusing solely on ASX listed companies rather than exploring international listings for comparisons. It would be wise to heed the comments from even the most optimistic contributors here, noting that brine resources in South America are abundant. The true asset value lies in the capability to extract the resource, which ultimately depends on technical expertise and access to capital.

P.S. - The term "sunk capital" referred simply to funds already invested in Rincon, nothing more. If it eases your concern, I'm happy to rephrase it as "funds invested."