I know this will not be popular - making comments refuting LTR's single biggest cheerleader, but please allow me to bring some experience and sanity to this thread.
"We all know that LTR will have a mcap of $12b-13b mid next year. That implies around $6 sp. "
Wow, you guys sure seem confident that a non-producing asset will be worth double the current market cap on Day 1 of their production ramp up phase. I wish it were that easy but I think you will find it's not that easy. You will probably also find that failing another T/O attempt, the large Wall Street funds will start to grind LTR down prior to production so they can accumulate more shares prior to profitability. It has happened and is happening to pretty much every other Lithium producer. They will create doubt in the market and latch onto every tiny little hiccup LTR have.
Simple calculation; (annual sales)
600kt spod @ US$4000/t = US$2.4b revenue (AU$3.7b)
The cost of that is 600kt x US$500/t = US$300m (AU$450m)
The annual profit before tax is A$3.2b
These metrics may be on the money say 18 months to 2 years AFTER commencement of production (so say early to mid 2026). Although I daresay costs will be higher than above. What about payment of large debt, or will LTR need to raise a lot more capital at a discount?. I believe CAPEX is now about US$900M or more and only $300M in the bank and a debt facility.
I said before WES is the best suitor IMO. WES has the possibility to offer cash plus script (WES shares), for example $3.5 cash $3.5 WES shares.
This is absolute fantasy land!!! So you think WES will pay 3 times the current market cap or more than $15 Billion for the privilege of owning LTR?. What a sick joke. They paid less than a Billion for Mount Holland which is a larger resource than Kathleen Valley. WES / SQM could double their output of Mount Holland AND process it into LiOH for probably another Billion or so - which would be a much better use of only a fraction of the funds you suggest LTR is worth.
I'll let you in on a little secret. WES are a very prudent company that look at value accretive transactions where they can add value with their expertise, and they are not in the habit of paying 3 times the current price of an asset. Sorry to burst your bubble but it just simply will NOT happen.
If a poor WES decision like this did happen, I would immediately sell all my shares in WES and so would many others. And I own quite a few as I work for them!!.
I think LTR is a very good company with a bright future. But it is probably appropriately valued (if not slighty over-valued) compared to its peers in the current market. The ALB bid was a godsend for LTR and gave the SP a left field kick - you should be very thankful - not angry!!. I do expect the rising tide will lift a lot of boats in the 2H 2023, but I would temper ones enthusiasm if expecting LTR to double or triple in a year which seems somewhat unlikely IMO, unless, PLS, AKE, CXO and others all double and triple as well. I do expect most of these producers to say double over the next few years, which would be a nice result and a healthy return. No need to allow greed give you crazy high expectations.
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