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Alterego1168

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14/06/17

17:18

Post #: 25274373
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Originally posted by Fishtaco ↑

Here you go - Source, The Australian. Posted 12:00am today.

Chris Ellison’s Mineral Resources could emerge as one of the biggest lithium producers in the months ahead as the contractor turned iron ore miner shapes as a major supplier to the booming electric vehicle and battery industries.
Shares in MinRes soared by more than 13 per cent yesterday, taking market capitalisation well past the $2 billion mark, after Deutsche Bank analyst Paul Young published a research note describing MinRes’s Wodgina lithium project as “a monster”.
Wodgina, bought by MinRes for an undisclosed sum last year, has kept a low profile compared with other Australian lithium projects.
But Mr Young followed his recent site visit to Wodgina by flagging that the project could generate $180 million in earnings before interest, taxation, depreciation and amortisation in the coming financial year while generating an internal rate of return of more than 200 per cent.
He said the output from Wodgina, combined with production from MinRes’s Mount Marion lithium mine near Kalgoorlie, would help MinRes overtake US heavyweight Albemarle as the largest lithium producer.
Deustche Bank was among the first major investment banks to flag the potential of the lithium sector more than a year ago, helping spark the investor frenzy around a series of explorers and developers.
While Mr Young’s positive report on Wodgina prompted him to lift his price target for MinRes from $10.80 a share to $12, he did warn that the volume of output from Wodgina could exacerbate oversupply concerns in the lithium sector and drive prices lower.
Rich lister Chris Ellison is the biggest shareholder in MinRes. His 12.3 per cent stake is worth more than $260m at yesterday’s closing price.
The bullish tone of the Deutsche Bank report will add to views in the market that MinRes scored a bargain when it bought Wodgina from Global Advanced Metals last year. GAM had previously mined tantalum at the project but had never fully assessed the lithium potential, while MinRes was already working at Atlas Iron’s iron ore mine at Wodgina and was able to move existing equipment straight over to the lithium project.
It also picked up historical offtake rights and a royalty from Pilbara Minerals’ neighbouring Pilgangoora lithium project, and eventually leveraged those rights into an 8 per cent stake in the company.
The investor excitement around MinRes also reflected the news first flagged by The Australian that Pilbara had secured $US100m ($132.3m) in bond financing for the construction of Pilgangoora.
Pilbara confirmed the raising yesterday. Managing director Ken Brinsden described the support as “a strong endorsement” of Pilgangoora.
Pilbara shares closed 1c higher at 39c.

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Min Resources has a 120 million tonne lithium mine, and will easily surpass $2B mark no problems.
The issue is the relative valuation between Min resources and other competitors.
ie: GXY has a 16 million lithium mine but with market cap at $760M (assuming no value attached to SDV, and James Bay as they are not producing)

Min Resources has a producing 120 million tonne mine, and a few others around... even if we attach $1.8B market cap to the 120 million tonne mine only, it works out to be about $15M per tonne..

Where as GXY, with $760M, it's about $47.5M per tonne.

This is a quick and dirty calculation and so DYOR.. i had somewhere a $ per tonne value slide

GXY Price at posting: $1.76 Sentiment: Sell Disclosure: Not Held
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0 Great analysis

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