Day to day discussions on S/P, page-14255

"In the long run Companies are valued on their earnings ..."

While true, stated earnings often don't reflect unrealised capital gains. KDR currently has a MC of $A767m. It has no earnings and its only asset a 50% ownership of an undeveloped Spod mine with a resource similar to Pilgangoora. Canacord have stated the WES offer undervalues KDR by at least 15%, which would give a MC of $A900m. WES will look to invest a further $A700m in developing their 50% share of Earl Grey.

PLS is about to materially increase the Pilgangoora ore reserve and resource. We have a functioning 2mtpa mine, finance apparently lined up for Stage 2 and a partnering process which will enable Stage 3 and substantial downstream investments. PLS has ~$A250m in debt from financing Stage 1.

The KDR deal gives an Earl Grey value of $A3.2b ((900m + 700m) x2). Accordingly Pilgangoora must be valued at more than that. We'd still have to spend $A500m on Stages 2 and 3 and another $A600m for downstream investment.

Therefore isn't the true market value of PLS in excess of $A1.85b (3.2b - 250m - 500m - 600m) based on the WES/KDR transaction?

Further, there is also the opportunity cost of holding an unproductive asset for 2 years to factor in. PLS will be yielding an EBITDA of ~$A150m for those 2 years. So the way I see it, is that the true market value of PLS is $A2.15b (1.85b + 150m + 150m). A SP of $A1.16.

Of course, when its all running at full capacity our MC will be many multiples of that.


"The battery factories will grow with demand ..."

I really feel EV demand is here now, although you wouldn't think so just looking at the Australian market. Battery factories will be built on the understanding of having already secured contracted upstream supply.

Given the difficulties of bringing a mine to nameplate ... and the recent suppression of new mine startups, it seems inevitable that there will be "mistakes" that interfere with the raw material supply forcing EV Battery makers to seek out supply on the spot market. Just look at the impact the South American IO mining tailings dam has affected IO prices recently. Whatever cost advantage Nemaska had, has been well and truly blown on construction costs of $C2b.

Oversupply is an illusion. Accordingly there are bound to be periods of SC6 price fluctuations.

Also, the current trend is towards NCM622 and moreso NCM811 batteries. Lithium Hydroxide is set to rule for the next decade until mass adoption of Solid State EV Batteries (that's if they can be commercialised). I just see the brine producers stuffed until then. Their expansion will be limited as only the quality LCE will make it to market. The additional processing costs of lower grade, will destroy any cost advantage (for LCE) they may have ever had over hard rock. They are further hamstrung as their LCE production is often a byproduct of Potash production. To increase production of LCE, will see them destabilise their lucrative Potash market.


Maybe its Maybelline, or we just need some Xentrax.

https://www.youtube.com/watch?v=wvj0CwoJGkQ

https://www.youtube.com/watch?v=5IZrYeUX3MI

https://www.youtube.com/watch?v=0xZ52mG1yIo