Hi RE,
Yes I have modelled the chloride scenario - I have just revisited this and provided the numbers below.
I have made the following assumptions:
1) Capex is assumed to be 60% of what was provided in the HMW Updated PEA - based on ballpark comments made by JP in various presentations (to be confirmed in the DFS).
2) The HMW production output is increased from 20ktpa to 25ktpa as hinted by JP (to be confirmed in the DFS).
3) I have assumed that the payability of chloride is 75% of carbonate (perhaps this assumption is overly aggressive but 60% seems too low given that the pricing as of March was around 90% payability - I haven't seen chloride pricing in awhile now -
@bombersmadd can we trouble you for an update?). I assume that the supply deficit will largely revolve around the raw material rather than the conversion capacity for the best part of the next decade. I'm no expert but I do understand that conversion to battery grade carbonate or hydroxide is technically very difficult
but it becomes impossible without the raw materials - therefore I am expecting/assuming that the current premiums on chloride (relative to the historical discount) will persist for quite a number of years. I have used the long term forecasted Lithium carbonate price from the LPI DFS of $23,609 US/t - which I don't think is unreasonable - and a 25% chloride discount to come up with a $17,707 US/t chloride pricing assumption.
4) I have assumed the chloride opex to be $2,200 US/t instead of the $3,518 US/t presented in the PEA for carbonate. This was based on the analysis that
@bombersmadd did in this post
here.
5) I have not included Candelas in this valuation as the capex and opex implications are a little more unknown. However, a Candelas carbonate operation would add another $180m in post tax free cashflow with the possibility of avoiding any further dilution (as the profit from HMW could be used to fund Candelas) which would add another $2.7-3.2 billion to the MC (yes ~3 billion in MC from a side dish).
So using these assumptions we get a
post tax NPV of $2.88b in AUD (using an 0.70 exchange rate) and an annual post tax free cashflow of $345m (AUD) for the HMW project alone. This translates to a $13 to $16 valuation in 2024 (using a PE of 15 or 18) after taking into account 50% dilution to raise the capex funds required for a chloride operation and assuming that the raise is done at an SP of $3 after offtakes are announced in early 2023.
ALL IMO DYOR.
To be conservative and to account for the variation in Quality of Chloride and potential impurities etc, I think what you have modelled i.e. 75% of the Carbonate Price is reasonable, I do look forward to the DFS being released in December / January which will give us holders greater oversight into the Chloride CAPEX, OPEX and Revenue numbers
(20min delay)