I highly doubt we will be raising funds to develop HMW at these...

I highly doubt we will be raising funds to develop HMW at these levels. The SP will appreciate leading into the DFS and after (assuming it is positive) as well as when binding offtakes are secured. It would make sense to raise the capital required to develop HMW after these milestones - not before.

However, the dilutive effects of raising at current levels are not as bad as one might think when you actually run the numbers. The following table shows what Galan would be worth if we raised at the current share price of $1.17 all the way through to $4 (all scenarios assume capex is 50% debt and 50% equity financed). The table shows that if we raise the capex required for HMW at $1.17 that Galan would be worth $6.83 once in production assuming a PE ratio of 15 (the table also shows valuations at a PE of 18 and 20). Keep in mind that this valuation excludes any value associated with Candelas and Greenbushes and is also using the $18k Lithium price in the PEA (we could be selling at double this price for the first few years) and 20ktpa output (which is likely to increase to 25ktpa). If we raise at $3 Galan would be worth $9.37 once in production (with the same assumptions i.e. PE ratio, debt/equity split, Lithium price, production output, etc...). I think that this is the more likely scenario as raising funds or entering a partnership before the DFS is complete, and binding offtakes obtained, will be more dilutive (and not in shareholders best interests).



So it probably depends on how you want to look at it. Having the share price appreciate to $6.83 is still a pretty good outcome (it is almost 5 baggs from here). However, if you compare it to raising at $3 and having the share price appreciate to $9.37, it means you miss out on a further 2 baggs by raising too early. So yes, it's not a good [comparative] outcome to raise at the current price level but it would not be the end of the world either (though I would still call it a disaster - simply because it's so easy to mitigate i.e. just wait until the time is right).

If we sold HMW now what kind of premium would we get on the current SP? If it was 100% it means selling an asset now at $2.40 which could be worth $7 to $10 (quite conservatively) in the future.

To take this a step further if the DFS does increase to 25ktpa (as hinted by JP) and if we use the $23,609 US/t Lithium Carbonate price that LPI used in their DFS then the production valuation for HMW only will look something like this:

Note: In this model I have assumed that the HMW capex increases to $694m AUD to produce the additional 5ktpa.

So in my mind selling now for $2.40 is a much much worse scenario than raising the required capex at the current share price. Ultimately, we don't want to do either of these things as we are just short changing ourselves in order to get a more immediate outcome.

ALL IMO DYOR.