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0.3¢ morella corporation limited

push spodumene price to 650 USD, PE to 12, output to 220000tpa...

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muppet655

3,740 Posts.

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23/06/19

12:03

Post #: 39193411
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Originally posted by muppet655: ↑

Far more simplistic to use empty cells for multiple quarters when a clear trend of increasing output and recoveries is already manifest (and thus a downtrend in costs can be expected). The market is meant to be a mechanism for forward looking valuations too so using a conservative PE on early stage numbers also doomed to undervalue.

We look nailed on for >190,000 tpa and possibly much higher soon, prices are soft and may well soften to $550 USD soon. That will be slightly mitigated by AUD depreciating.

Costs per tonne will remain opaque for a while $420 AUD is conservative going off guidance. So worst case is about $790 AUD/Tonne - $420 for a margin of $370 multiplied by 190,000 giving gross revenue of $79,000,000. Early stage producer with clear upside and expectations of spodumene price recovery makes for a PE of 10+ as more reasonable.

30% tax, say approx $600,000,000 valuation, take off the debt gives $430,000,000, 2.2 billion shares, gives base case 19.5 cents per share, thus IMO still very good buying and a minimum takeover price of 40 cents.

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push spodumene price to 650 USD, PE to 12, output to 220000tpa and cost down to 380 AUD and you arrive at an SP of 60 cents per share even with the debt in the mix.

AJM Price at posting: 13.5¢ Sentiment: Buy Disclosure: Held
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