Compelling opportunity, page-5929

great post spovend , all good arguments . The valuation of lake is insane but that’s markets for you. The old analogy of tortoise and hare rings true , our valuation rise has been tortoise like compared to lakes in the last year with theirs built on hype and as you rightfully point out a lack of understanding of the Opx risks , which should attract a much higher discount factor in an npv calculation and hence a lower valuation.

In my view the market is putting a huge premium on the scalability of this tech , which lake doesn’t own and has I think from memory only in country exclusivity on . I use to follow lake closely but I don’t now, so I could be wrong on this point but now .

So even if the lilac tech works , I don’t see it delivering value back to lake shareholders anywhere near the differential , the current difference in market caps imply . The main difference is long term potential yield from an acquifer, but that’s very much a guess at present how much that is . As has been commented by others too , once a system hits steady state there is no cashflow advantage other than the long run yield differential. Most evaporative systems in the high andean punas are somewhere around 60% yield ( purity of resource here plays a role ) but have heard some resources are as low as 50 % and some almost reach 70%. Lakes claim is this tech takes them well into the 80s% . Time will tell….. if this is hogwash or not .

Secondly as bombers posted a while back this advantage is only on one part of the extraction process. Getting to the battery grade chemical step , which is arguably where more of the value add occurs , here the lilac tech delivers no advantage at all in this step.

The other thing too investors should be cognisant of is capital management and hence dilution risk . As a longer term resource investor I have learnt this lesson the hard way . You take on enough risk as is by investing in start up resource plays , so you want to maximise your chances of gains when you do land on a successful company .

Those gains even if a resource explorer finds something of value and can get it to production can be way watered down to shareholders if along the way management haven’t given a toss about running a tight ship on raising fresh rounds of equity or on excessive options and free shares for mgt and directors , or even debt funded. If that’s the case by the time one gets to production some companies have got billions of shares on issue. This really kills long term wealth creation for the individual retail shareholder and also is a great proxy to assess does mgt actually give a toss about shareholders or are just about ripping as much money out of them as they can to fund their lifestyles .

On this score when one compares Gln and Lake , very clear cut difference at play here and by the time lake hits production it will have probably have over 2Bn shares on issue and I suspect it will be much closer to 3Bn . A bit of luck we will get to production and may have well under a 1 Bn . In the longer course of time this drives a huge difference in returns to shareholders as that is the denominator one has to use to divide the value of the projects back by to get what capital return we might get.