Congratulations to PLS - first off-take is always the hardest negotiation.
Current Share Price 70c (approx 15% move with 40% of production contracted - Day 1 (expecting higher share price over next 7 days)).
Benchmark is Sichuan Tianqi Lithium Industries Inc (002466) - (hard-rock supply / processing) - same business process / model
- Not the brine plays as they are 6% to 15% max lithium production and predominantly potash revenue.
Share Price Expectations & Logic
1. 60% production still to be contracted approx 22.5% upside (40% contracted caused a 15% uplift) = $0.86 Share Price (short term)
2. Sichuan Tianqi Lithium market cap is a ratio of 3.02 x Sales revenue.
- PLS Spod = $84Mil Rev + Li Carbonate = 150 mil ~ Total = USD $234 mil for 40% production (from @binwood)
- Assuming 100% production & processing = (234 / 40) * 100 = USD $585 mil
- Sales Ratio Multiplier 3.02 x USD 585 = USD 1,766.7 market cap ~ AUD 2.35 bil market cap
- 2.35 bil / 1.1 bil (approx shares on issue) = $2.13 Share Price
3. Enterprise Value to Resource Comparison (Australian Companies)
- PLS is still approx 6x undervalued relative to NMT = $4.20 share price
- Good call Macquarie Bank that this is your #1 pick hahahahah ! - how does PLS feel ..... LOL !
- PLS is still 3x undervalued to combined GXY & GMM entity (assuming Australia and SDV deposits) = $2.40 share price
My thoughts: make up your own mind discount for risks (Risk: Mine Completion / Commissioning (20% - approx) - all other risks now gone).
Short Term Price Catalysts
1. Media (hopefully the company gets some).
- announcement of who partner is - hopefully further positive.
2. DFS (august) - expect large impact on share Price
3. 60% of production to be contracted - with pre-payments - I expect this to have an even bigger impact on the share price going forward as the company can now argue for better terms that the initial off- take has been signed.
4. ASX 200 inclusion is almost certain (10 ~ 15% share price impact)
5. Macro:
- Lithium Prices still rocketing up with no sign of slowing. Still a fraction of an EV price (circa $200/EV) so still large % move possible.
- More Giga Factories - market still has not absorbed the latest 15.5 bil VW factory / Commercial fleets (buses in particular) / electric bikes.
- Government policy - all EV (Germany / Sweden / Norway - more to come)
- Government supportive subsidies
Great place to be. I am not selling nor will sell in the short term.
I am happy to bet anyone my entire holding we go over $1.00 before end of year.
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