Good move, but it may take the market time to really realise the full value.
When Spod prices were US$730 you needed quite a large resource to cover the capital costs of setting up a new mining operation. It might take a 7-10m resource before you got USD NPV's into the $100m range. The much higher Spod rates seen today means that much smaller resources can be economic.
For example, consider a 1.2m resource at 1.4%. With a 70% recovery rate, it could be 196kt of Spod. If there was a A$89m (US$65m) capital cost to mine this resource, it would be uneconomic at margins of US$300/t (unless you could re-use the capital cost on a subsequent project). You might consider it at margins of US$500/t because mining it would generate $98m of margin and that would cover the $65m capital cost. With spod north of US$2500/t the margin now could be as high as US$2,000/t. Mining it would generate $392m of margin that easy covers the capital cost and provides shareholders a very useful return.
This means a portfolio of a lot of small/medium lithium bearing pegmatites now has a lot of value where as previously you needed the big-one to be economic. This land area acquisition may have the big-one, but its also likely to have a number of small-medium targets. As outlined above, there could be a lot of value now in these smaller finds.
Also incidentally, if a scoping study was done on mining North Aubry it would probably be highly economic at the current JORC resource and current Spod prices. Its good that the resource size is likley to increase, but it doesn't actually need to for an economic case to mine it to exist.
GT1 Price at posting:
83.0¢ Sentiment: Buy Disclosure: Held
