I acknowledge this report. I do not think it is cause for a sell...

I acknowledge this report. I do not think it is cause for a sell sentiment.

Fundamentally speaking:
sell sentiment means that you think the company is overvalued. My calculations put free cash flow at the moment somewhere between US$50M and US$80M with Mt Cattlin by itself. This other plant is due to come online around that 2019/2020 period about the same time SDV is planning on producing itself.

With regard to the future and making the following conservative speculative assumptions:
* MC doesn't improve its output nor its efficiency.
* GXY finds contracts for exactly 160kT per year for MC supply
* MC only produces 5.5% concentrate
* In order to continue to sell product the price of Spod and Li Carbonate is reduced by 40% (any lower and hard rock projects would probably close which would suppress the supply and increase the price back up).
* The actual operational costs at SDV increase to USD$4000/T
* James Bay doesn't proceed at all.

The free cash flow would be:
MC: ($830 x 0.6 - $390) x 160kT = $17.3M per annum
SDV: ($15,000 x 0.6 - $4,000) x 25kT = $125M per annum
JB: $0 assumed.
Total US$142.3M free cash flow. 1.9B shares pre consolidation.

P/E at the current price (0.41) would be 5.47
Ridiculously undervalued IMO.

In order for the investment to be a sell sentiment I would expect the P/E to be higher than it currently states. i.e. 13⁺ . For this to work the earnings needs to be less than US$60M per annum.

i.e. MC would need to shut down and SDV free cash would to be capped at US$60M or $2,40o/T
End price for Li Carbonate would need to drop to $6,400/T or lower, equivalent to a drop in price of 57% globally and in the face of the subsequent increase in demand as all hard rock projects around the world close as well. This is simply not a possible outcome to happen in the next 3-5 years IMO, regardless.

All my opinion only.

GLTA