"...Latest MOM podcast has Joe L on and covers GLN a little (pre Authium) where he says the Offer recieved undervalued the company..."
As mentioned, the offer would have corresponded to a resource valuation of USD 15.78 per tonne of LCE.An offer for the best tier one resource in Argentina.
In December, a multiple of approx. 55 US$/t LCE was offered for a low-quality Argentinian brine exploration project by Lithium Chile. Potential very questionable.However, if this multiple is applied to the Galan resources, the result is 522 million US dollars.
Next example: In Oct. LPIs "Maricunga project/ressource was bought by Codelco for 242 million US dollars. Lithiumressource: 1,9 mt LCE (similar to Candelas). In addition to lithium, the ‘Maricunga’ resource also consists of considerable quantities of potassium. Potassium has a much lower market price than lithium. I value the potassium share at one eighth of the total resource value. This results in a multiple for the Lithiumressource of approx. 101 US$/t LCE. Galan has 9,5 mt / LCE. Do your maths.Why a discount for Hombre Muerto resources should be justified is up to you to decide.
Galan's tenements are located in the immediate vicinity of POSCO's 4 billion project and RIO's "Fenix" and "Sal de Vida" projects. RIO has recently announced further substantial investments in both projects, US$ 640 million for Sal de Vida alone.The resource quality of "Candelas" is of the same quality as Sal de Vida. The property is directly adjacent to Sal de Vida.
I can't think of a similarly promising turnaround candidate in the current lithium segment that will either become a low-cost near-term producer with world-class resources or is much more likely to be a takeover target in whole or in part. The deal with Authium puts a stop to a cheap takeover for an "apple and egg price" (US$ 150 million Huayou Cobalt & Renault Group).
Hope you had a nice Easter.
GLN Price at posting:
10.5¢ Sentiment: Buy Disclosure: Held
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