CXO (ASX) Banter and general comments

Originally posted by Bluegoose: ↑

Hello fellow CXOers,

I have been reviewing all my holdings of Lithium and other stocks and looking at whether I trim my holdings and take a few bucks off the table.

With many of these stocks I was DEEP in the red for several years. The worst thing I think I can do is sell now, get my money back and watch this amazing cycle we are in the early stages of. Lithium Mark III if you like.

I timed my entry into CXO a few months ago nicely at around 5.5. Trust me, I never time things that well usually!!.

With a modest 150,000 shares, I find myself with a good profit at current prices. So I assessed my CXO and other holdings.

I have concluded that now IS NOT time to sell yet. Sure, we need the Macro situation to behave itself and the USA not to massacre each other etc, but generally speaking the Lithium market is just coming out of hibernation and commodity prices are on the rise.

I truly believe that CXO will be in production by late 2022 and at the perfect time to take advantage of strong Spodumene prices. And with a superior cost base due to infrastructure and proximity to the port, and no flotation circuit required, they will have an excellent balance sheet with minimal debt and be pretty low or at least competitive on the cost curve.

That being said, I can make a case as follows once the mine is up and running;

175,000MT Spodumene at A$200/MT margin after fixed costs = A$35M per year

With a growing resource and LOM, I can see a PE multiple of 20 being conservative.

20 X A$35M = A$700 Million market cap.A little over 3 times the current SP / Market cap. 75 cents+.

Maybe a little dilution along the way, but maybe also an upgrade in Spod capacity and potential earnings.

Then we have the GOLD which could be a good earn by itself.

So I can easily make a conservative case that CXO will be over 50 cents in the next few months and on it's way to possibly $1 if things work out well for them and they do some nice deals and improve the resource along the way.

Doing these numbers helps me to decide whether CXO is fully valued (and whether I should trim my holdings) and my conclusion at this stage is a resounding NO.

I am expecting multiples of the current SP in 2021 / 2022 assuming the broader markets behave themselves and the Lithium price remains strong. I could be wrong, but I've put some science behind my calculations and it's better than a knee jerk reaction of just selling after a good run. Look at Vulcan Energy and the run it's had. How many people sold out way too early as they didn't see the value they were creating.

Good luck all whatever your decision.

Expand

You seem to be in the ballpark of many others (and myself) in your thinking on this. As a minimum 40c is fair and if a few things go our way then that would be very low balling it. I have free carried and some but still holding a sizeable chunk for more expected upside. If we keep building our LOM as expected this will give us incremental growth in the SP and getting finance, a positive FID and some luck with gold will provide explosive growth.

No.	Vol.	Price($)
8	291639	7.9¢

No.

Vol.

Price($)

291639

7.9¢

Price($)	Vol.	No.
8.0¢	880000	4

Price($)

Vol.

No.

8.0¢

880000

No.	Vol.	Price($)
8	291639	0.079
12	950781	0.078
6	1023000	0.077
16	1090521	0.076
31	953330	0.075

No.

Vol.

Price($)

291639

0.079

950781

0.078

1023000

0.077

1090521

0.076

953330

0.075

Price($)	Vol.	No.
0.080	880000	4
0.081	430644	6
0.082	161259	5
0.083	776266	12
0.084	873983	10

Price($)

Vol.

No.

0.080

880000

0.081

430644

0.082

161259

0.083

776266

0.084

873983

(20min delay)
Last 7.9¢		Change -0.004(4.82%)		Mkt cap ! $168.8M

Open	High	Low	Value	Volume
8.4¢	8.5¢	7.8¢	$2.325M	28.60M

Banter and general comments, page-127

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Banter and general comments, page-127

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