Has anyone had a chance to read the following article:
https://seekingalpha.com/article/43...utm_medium=email&utm_source=seeking_alphaThe final paragraphs of the article caught my eye:
"
My top pick for junior minors is Lithium Americas (NYSE:LAC). One of my previous articles details the strong growth potential of the company, focusing on one of its two projects under development, and I continue to believe that the company has tremendous growth in its future. A quick demonstration of Lithium Americas' potential value is that Ganfeng recently gave Lithium Americas $160 million in order to increase their stake in Cauchari-Olaroz, Lithium Americas' smaller project under development, by 12.5%. This would give that single project a total value of $1.28 billion, but keep in mind that it is the lesser of the two projects. If we apply this same value to Thacker Pass, using the significantly higher production, slightly higher margins, and later production date, the project has a value of $1.984 billion, of which Lithium Americas owns 100% of. Due to their 50% stake of Cauchari-Olaroz, this mine is worth just $640 million to them, but the two together are worth $2.624 billion. This basic valuation is just the current value of the mines and as neither mine has begun production, their future value should become much higher with growth in revenue and reduction of company debt. Nonetheless, Lithium Americas' current market capitalization is just under $289 million, an 89% discount to this basic valuation. This demonstrates quite a discrepancy between what insiders value the company at and how it is currently being valued. This potential for growth, coming from the value of lithium and the company itself, is what makes this company my favorite lithium bet, but the risk that comes with it, especially its debt load, is noticeably higher than the ETF or more established players."
This extract contains the first piece of market evidence (seen for a while) on current valuations for an Argentinian brine project. Given the project valuations the author is talking about has the valuation of new development projects in the US$billions, it must be giving the likes of Mac Bank heart palpitations given they ascribe zero value to SDV - an Argentinian brine project currently being developed.
Perhaps this scrambling to buy shares in GXY has something to do with their analysts short-sightedness and we are witnessing the covering of analysts as a result of misjudgment??
Either way, there's got to be some major re-thinking of how development projects are being valued and those valuations need to be reflected in the share price of these stocks.
