At yesterday's webinar Paul said that production at Big Sandy...

At yesterday's webinar Paul said that production at Big Sandy would be around 20 to 30,000 tonnes of LCE per month and that this planned production rate may increase post drilling and release of a JORC - which I expect will be around 4 million tonnes of LCE.

On a breezy Friday afternoon and a slow market day, it's worth having a look at what kind of future share price and revenue stream this kind of production rate would provide us.

Production = 20,000 tonnes per year X US$30,000 per tonne = US$600million per year.
With a price/earnings ratio (PE) of 8 = $4,800,000,000/ 2 billion shares = $2.40 per share.

Allow a 25% discount for debt (including capitalraise) and we're looking good for $1.80 per share once drilling is complete andwe have a JORC and a successful research facility built. This could all happenby end of calendar 2023.

The current spot price of 99.5 per cent lithium carbonate is US$60,000per tonne. I’ve discounted this spot price by 50 percent to account forcontract pricing.

When looking at Big Sandy, and using very conservativeassumptions (including a lithium contract price that is half the current spotprice) then the EBITDA from just one year is double AZL’scurrent enterprise value (EV). This makes us look very undervalued but given the early stage of development is of course understandable.

Another way of looking at the future possibleshare price is EBITDA. For example, Lynas Corporation trades at 16 X its EBITDA.So come 2024 or thereabouts and if AZL trades at the same 16 times EBITDA metric,the EV would be $4.8 billion. That's 16 bags from the current EV of $0.3billion. It all looks better if you factor in more realistic lithium pricing, convert US dollars to Australian dollars (for the benefit of Lifefree this is is calculated by dividing $4.8 billion by 0.71) and anything that Lordsburg may add.