General Discussion Banter GLN, page-9236

In terms of valuation , one company that highlights the ongoing under valuation of Galan that is worthy of making a comparison to is Neo Lithium and their 3Q Project that was purchased by Zijn Mining earlier this year for $737 Million USD which equates to $ 1.10 Billion Aussie using the current FX rate of 0.64. That occurred in early February this year before Lithium prices have run up substantially more.

Why I find it a good comparison yardstick is the DFS completed by Worley ( a highly reputable engineering company) for Neo late last year was that it contained a working resource estimate not dissimilar to what Galan now has.

Here are the key numbers that made up Neo's DFS released around October last year ; they had 2 Resource estimates depending on Cut Off grade. Going with the lower cut off and hence the higher figure for NEO gives 5.37 M Ton LCE.


This M&I total of 5.37 M T LCE compares quite closely to Galan's of 5.10 M M&I for HMW and 685 K for Candelas after the recent release. Neo had a bit more in the Inferred bucket as of this DFS but likely from comments made by JP in some of the interviews in recent days not unreasonable to infer ours also has further to rise yet too.



Where it gets interesting is that Neo used that level of MRE to come up with a NPV in its DFS as follows that formed the basis of the buyout by Zijn Mining as follows ;


The other key assumption used by Worley in getting to the $1.13 USD Million NPV was on pricing which used an average price of $12,321 per tonne, likely less than half of what most long run analysts would likely use now;


So based off this Zijn at $ 737 M USD paid approx 65 % of the externally complied NPV at that point of a ready to roll DFS approved project. To be fair the other key ingredient Neo had was a completed Environmental license to mine and mining permits, which obviously is another key valuation catalyst.

What is interesting but is if one rehashes the NEO valuation much closer to $25 K long run pricing which many analysts are now moving towards, that would have thrown out around $2.30 BN USD in valuation and assuming the same % NPV paid out would give a purchase price around $1.50 BN USD valuation as an outright sale, it it happened today. That converts to $2.30 BN Aussie on current rates or about $7.80 per share if Galan was similarly sold around the same valuation approach.

Further that analysis was working on 20 KTPA, and again from comments made by JP suggesting we could be somewhwere above 25 K T, it would not be unreasonable to now infer a likely annual production rate of 30 KTpa will appear in our DFS, which would probably then upscale the NPV further to somewhere in the $3.0 - $4.0 BN USD range ( circa $5.0 BN Aussie) and using the Neo comparator of price paid to NPV of 65 % for a ready to go permitted project you are at a valuation of somewhere around $3.0 BN Aussie in a sale situation. That about $10 per share . For Lke readers here and I know there is a few in the peanut gallery, see how much that can jump per share if you actually manage your Shares on Issue responsibly.

Of course we are some way from having a fully permitted project , but the DFS isn't far off. The point but is there is lots of external evidence out there using very reasonable comparisons that show at $ 450 M market cap , the valuation in an outright sales situation ( much less taking it to production) is way off the mark in comparing to reasonable analogues. For those want to argue its not a reasonable way to a value a project , I call BS. If you buy a house anywhere in Australia today, whats the first thing the overpaid valuer does ? He looks up what houses in the same neighborhood also got sold for and starts from there. Basically what I have done above is pretty much the same approach but adjusted it for likely known cashflow changes.

Now yes you can apply bigger discount factors for risk but this is what I like about this Neo comparison is its somebody also buying an Argentine asset so the implicit country risk has already been counted in the comparison. The other way to look at the undervaluation is to say that based off valuing other very similar projects to ours but using half the current recognized long run pricing and 2/3'rs our likely annual production, the like for like project is still only 40 % of the value paid to be out Neo earlier this year. One can argue over the upside here but whatever way you cut it, its looking ridiculously cheap.