Galaxy v Kidman MC, page-4

Share price is always a reflection on expectation of future production and profit, not current ones.

Don't forget that GXY has done a revised DFS on their Argentinian brine lithium project SAL DE VIDA (SDV) about 14 months ago and its NPV = $1.4 billion alone (at 8% discount), and if taking into account the surging price of lithium over the last 14 months and over the next 5 years, its NPV could well be around $2billion. And that is only for SAL DE VIDA.

For its James Bay lithium project, with its latest drilling update just 2 days ago with some very impressive hits of more than 80m thickness and more than 100m thickness of around 1.56% lithium, JB is turning to be quite substantial resource for GXY.

They are also working to bring their recovery from 61% to 75%-80% and this means their cash cost may be much lower than current US $320/ton. I would not be surprised to see their cash cost reduced down to $270-$280 in the next few quarters. They are targeting production of 200000tons/year. Plus, their next contract price for 2018 seems easily to be more than US $1100, given that TAW already locked in their off-take price at around US $1040 about 6 months ago if my memory is good. This would transpire into very significantly higher profit for their Mt Catlin operation in the years ahead.

200000 tons * (US $1100 - US $280) /0.78 (exchange rate) = about AUD $210mil EBITDA
If the market give it a PE of 10, that would give it a MC = $2.1billion AUD
If the market give it a PE of 15, that would give it a MC = $3.6billion AUD.

Now, add in NPV value of Sal Di Vida of $1.4billion-$2billion, and
add in value of James Bay = approximately few hundred million dollars.

All in all, I would not be surprised to see GXY reaching MC of $3billion-$4billion (and rightly deserves so) in the next 12 months once they get a partner for their SDV project and lock in some off-take agreements and some funding. Give it 12 months or so to execute on their plans and ambitions and the MC will take of itself.

For KDR, what GXY and PLS can achieve in terms of market cap, will have fundamental correlation to what KDR MC can also achieve in time. I do not see why we cannot move to $1billion MC and then move on to $2billion MC because we have SQM on our side. SQM is the biggest lithium carbonate/hydroxide producer in the world with 22 years experience in the trade. They have the skills, the operational experience, the marketing, the technical expertise, and the money to see the JV to successful production. Remember in all broker/analyst reports by Harley, Paragon funds, and numerous industry articles, it has been highlighted that lithium refinery business is where they make the huge profit margins. So, if GXY and PLS can make bloody good money, KDR/SQM refinery business can make even much more money because of the huge profit margin in refinery business.