Beer and Co Research Revisited

Just one thing before we leave Beer & Co. Something pretty simple. They get to their current headline 70c valuation, using a price on spodumene concentrate of $400US. But then, in rather small print, they say, had we used $500US, which IS WELL BELOW CURRENT PRICES, then we would have arrived at 90c/share.

They then go on to say that prices for low iron content spodumene concentrate (that's the stuff PLS can produce) are now (right now) attracting $750US to $1000US/t.

So, if they jump from 70 to 90c (a 28.5% increase), working on $500/t instead of a $400/t price ( a 25% increase), you would imagine the valuation (risked) must lift from 90c to at least $1.35 using $750US/t. In fact it would be far higher than this, because the extra margin goes straight to the bottom line. The fixed costs do not change.

Not entirely sure why they would not use current spot prices, as there is a mountain of evidence that spot prices for high grade spodumene are only going in one direction.

Food for thought for even the most conservative amongst us.