At $1.09/share,
fully diluted enterprise value (including performance shares conditioning upon financial close for a commercial scale lithium production facility capable of production of at least 5,000tpa LCE per year):
$273m with total available cash of $70m ($65m current cash upon Tranche 2 completion, plus option conversion of $5.3m: Director Daniel has 2m options).
GLN has three projects:
1. HMW (100% owned, current JORC indicated resource: 2.3 million tons LCE). Land size is about half of POSCO (its resource was 2 million tons LCE upon the acquisition from GXY, then its resource size upgraded six times to about 12 million tons LCE). GLN recently acquired concession and upcoming drilling should increase HMW's resource significantly, imo.
I am confident HMW should be able to support 25,000 tons LCE per year for 40 years, that's 1 million tons LCE reserve.
We know our opex is very low, before any optimisation, is about US$3,518/ton.
Main factor is lithium carbonate battery grade long term price, we were using a very conservative price of
US$11,687/ton. Peer used US$15,500/ton. Currently spot price fetches
US$19,000/ton and still going up.
When FMG was $2.20/share, iron ore price was US$57/t, FMG has all in cost of around US$31/ton, other big three producers has cost of around US$20/ton. Average institutions forecast price was around US$50/dmt, no one would image iron ore price to surpass US$100/dmt, but we witnessed iron ore price hit all time high of around US$240/t, currently is still well above US$100/dmt, sitting around US$140/ton Versus big 4 producers cost of ~US$20/ton.
Average brine producers cost is between US$4,000/t to US$6,000/t; Some high cost producers up to US$9,000/t.
For hard rock converters, if spodumene price at US$1,250/t, then cost would be around US$15,000/t.
I think, long term lithium carbonate battery grade price, would stay above US$15,000/ton.
The Chairman of Ganfeng, expects lithium carbonate price to stay between US$15,500/ton and US$18,500/ton.
So it's conservative to use US$15,500/ton, HMW at 25,000 ton LCE per year, opex of US$3,518/t, annual EBITDA would be around US$300m, mining life: 40 years. Life EBITDA US$12 billion.
If used today's lithium carbonate price of US$19,000/t, then HMW could generate EBITDA of US$387m per year, for 40 years.
My guess, HMW alone should be worthy at least $500m as of today.
2. Candelas (100% owned): JORC indicated resource of 680Kt LCE. That's 3 times of AGY's JORC resource, or about 1.5 times of AGY's JORC + Exploration targeted resource. AGY is advanced at construction 2,000 ton LCE at the moment, so much advanced, its valuation is at around $190m (assuming no capex being spent, for comparison purpose).
My guess, Candelas should be worthy at about half of AGY's, say $95m.
3. Greenbushes South Project (80% owned): Large land holding, 353 km2 JV plus 43 km2 100% owned. Only 3 km away from the Greenbushes Mine (was valued at ~$6B per IGO's transaction, IGO share price increased significantly afterwards).
At current stage, I only view Greenbushes South project as a Bonus, to be conservative, place no value for now.
Total value: HMW: $500m + Candelas: $95m + Greenbushes South: 0 + Cash: $65m + Option conversion: $5m =$665m
Divided by fully diluted shares: 315m, my guess valuation as at today's status: $2.11/share.
The Tranche 2 was only subscribed by two institutions with track record of successful investment. They are willing to pay $1.15/share, they much see the potential of GLN, imo.
BTW, GLN will present on next Thursday's New World Metals investment conference.
https://drive.google.com/file/d/1UKbCdj16Df6orGmluRP5EsOfhAgtS5pl/view
ALL IMO, DYOR.
Have a great weekend ALL.
(20min delay)