Only 10 trading days left before the upgrade to the HMW Mineral Resource Estimate is due (was "on track for Q3 CY22") and it could come earlier than the end of the month.
While we wait for the next bit of news I have updated my valuation model for the HMW Lithium Chloride Approach to use the medium term pricing suggested by Daniel Jimenez in a recent interview found
here (google it if the URL is blocked). In this interview he basically said he could see $40 US/kg for
at least the next 3 or 4 years, and
probably above $30 US/kg beyond 5 years.
So if I take this medium term pricing forecast, which I feel is a nice balance between the overly conservative long term pricing forecasts referenced in feasibility studies (these forecasts have been slow to adapt to the current market conditions which have changed a lightening speed) and the current spot pricing, and apply a 75% payability (25% discount) for Lithium Chloride I get the following:
Using a Lithium Carbonate price of $40,000 US/t which Daniel thinks will prevail over at least the next 3 or 4 years results in a Lithium Chloride price of $30,000 US/t (using 75% payability). If this holds true then HMW
alone will be making over $600m in after tax profit (AUD based on an exchange rate of 0.70) in the early years. This would allow us to pay off the ~200m in debt required for capex in about 4 months - probably less given that tax will not be due until the end of the year!
Using a Lithium Carbonate price of $30,000 US/t which Daniel thinks will prevail beyond 5 years (possibly until the end of the decade) results in a Lithium Chloride price of $22,500 US/t (again using 75% payability). This means HMW
alone will be making over $452m in after tax profit in the later years - more than enough to fund a carbonate plant, Candelas, development of Greenbushes South and, at some point, a healthy dividend.
I keep wondering how many get out of jail free cards will the lakers be given? At some point you've got to look at all the red flags around you and take some action.
ALL IMO DYOR.
(20min delay)