Well you do really have to scratch your heads sometimes and ponder the tough questions. Especially so in these tough market trading environments where typical valuation matrices will get completely discarded ' out the window ' of of value which anything which resembles commonsense.
And markets at the best of times will not perform or even conform to what your average investor tries to make of it. And so values being compared to Albermarle etc as much as I like the thought of it .... at this stage of the cycle that notion is simply ridiculous.
If I was wanting to ' review ' , I would certainly come back to the basics and first principles of trying to understand whats going on here , and perhaps how did we get here and why the Market is taking its current view of Sayona's valuation.
So you have to ask yourself this. Mining as we know is all about RISK. And this was a RISK that Sayona took in gobbling up the Guo Ao held Moblan stake no more than a month or so after the ink had only dried on its NAL acquisition.
And we know the Canadian's had an agenda even back then regarding Chinese ownership of critical minerals , and off the back of the Huawei spy detention scandal. That was the beginning of it all.
So here we are now left wondering whether this was an ' olive ' branch gesture by Quebec and I.Q for Sayona's role in assisting to see off CATL as well as Gua Ao off and out of the Canadian / Quebec lithium mining landscape.......or was it in part a ' compensation ' gesture for ALL the mucking around with respects to Sayona's Authier project which seems to be endlessly and really ridiculously continuing when compared to other peer Quebec mining companies who have gone through the BAPE process.
We may never really know I guess . But either way , it would seem that Sayona paid what the value was being asked for by these 2 Chinese lithium players and / or what it owed them at those times.
In the case of NAL , CATL got every penny it put in back despite the rhetoric of how much the NAL operations had cost Quebec in all the previous ' Write Downs ' of former stake holders. Remember that the ' Windfall profits ' figure Sayona had disclosed in its accounts following the NAL acquisition was merely based on Accounting Standards recognition of previous dollars spent as well as Independent valuations and NOT anything that was reflected at the time in NAL's actual books.
Then of course Guo Ao received more than double the value it paid Perilya ( who was controlled by Chinese even back then ) in exchange for leaving its Canadian interests in Lithium behind it.
So these Chinese company's have done very well thank you very much by receiving every penny back and then some on their original investments.
So in Guo's case , they received approximately A$10.40 per JORC ton of resource back in October 2021 whereas someone like Frontier who still has to do a fair bit on its EIS as well as finalized DFS's for its multiple economic lithium deposits seems to be valued currently at around A$20.80 per JORC ton....or virtually double.
So even if we said Sayona NAL + Authier at 119.1 MT and Moblan at its current 12.03 MT would equal a total of 131.13 MT @ A$20.80 per ton which would equal a Market Value of A$2,727.5 or 30.75 - 31.0 cents per share.
Same with Critical Elements and their Rose Lithium project with its 26.3 MT of JORC defined resource giving them a JORC $ per ton against their market cap of A$23.65 per ton. They also have an NPV for just this project of US$1.9 billion ( A$2.879 billion ) and an IRR of 82.4%.
You could definitely go on with your comparisons until you're blue in the face , but what you will find is that Sayona's JORC $ per ton is in many cases more than half of its immediate Canadian peers.
And even if you take OFF Authier ( approx 20MT ) , and add another 12 MT for the doubling at least of Moblan , we're still at approximately 123.13 MT of resource for a market value compared to the average of Frontier and Critical Elements of A$2,736.6 billion ....so pretty much the same figure as using the lower of Frontier market value per ton JORC on the higher Sayona Tonnage leaving Authier in and Moblan the same as is now.
But we all know that Moblan is going to increase to some ' multitple ' , its just we don't know by how much , at what grade and cutoff , and of course the Drill Core ' PROOF ' of this actually eventuating. So the market is hesitant on this. But why is it discounting Sayona's ore reserves to HALF of most everyone else in this space. That's the BIGGER question we are trying get at here. Is it because the Market feels Quebec WILL jettison its 40% and wants it priced ' opportunistically ' . Who really knows. But I'd say there is a good chance of that , and the FTS shares to a degree go some way to proving my actual theories. And so does Macquarie's recent price target of 30.0 cents.......
(20min delay)