I guess I look at (and value) my SYA shareholding quite differently from most here. I don't ever check what the "short interest" is or sweat for drilling results etc. Fundamentally I'm looking at assets - and diversification. While I'm obviously looking for SP to go up, I'm not that concerned by daily share price movements - its a marketplace. The "asset" of the stock doesn't change daily on the price that someone is willing to pay for it. Now it you only own one stock or are a trader thats a different story. As an "asset accumulator" & company fundamentals investor, shorts etc are of secondary interest.
I'll put up a couple of charts. One I seen several variations of but in my variation I am only ever concerned with the Measured and Indicated (M&I) Resource. I totally ignore "Inferred Resources" (only really matters for comparison of exploration stage companies). I also pay attention to cut off grades. This is the first chart. I'm intentionally limiting this to just spodumene miners and looking at the resource (M&I only). The color coding is "Blue" for projects in PFS/PEA/DFS stage, "Gold" for under construction stage, and "Green" for production. It's not meant to be an exhaustive list, mostly because I own these shares (apart from Grota de Cirilo and Mt Holland) but there are also others I own (like AKE which has brine assets) and LAC (with brine and clay) and ALB (with a share of Greenbushes ... not shown as its well to the right of Pilgangoora) which is also a large refiner.
Ok - so what - pretty picture - what does it mean.
# 1 you hear reference to "Tier 1 Assets". Dougal Elder used the "Tier 1" description is his last interview "So,
I think Moblan, you know, has characteristics where it
could be certainly a tier one asset in terms of, you know, world-class lithium deposits". Leo Lithium uses this decription for Goulamina noting "
Goulamina sits in the Tier 1 quadrant, grade > 1.0% Li2O and resource > 100 Mt" (Leo Lithium includes Inferred Resources).
For me, a Tier 1 Asset is a Resource of 50MT (M&I only) with a grade > 1.25%, which at this point in time, excludes both NAL & Moblan (and Ewoyaa for our PLL investors - the only time I will mention PLL). So there is more work to do on those projects to get them to tier 1.
#2 you can easily see the scale of deposits coming online. The takeover offer by ALB for LTR makes for interesting discussion in the next chart. I bought into CRE.V (owner of Rose Lithium Project) long ago and been selling down as for me, a low grade smallish project is not a stock to own. I want to be in the Quadrant of High Grade/High Tonnage. I think Moblan (the single project Moblan + Moleon not the gazillion hectares of claims) will easily get there. As will Ewoyaa. As should Pak/Spark. I don't think NAL gets there or Finniss for that matter (nice grade but "smallish" but don't say that on CXO forum). That said, they both are now printing money and delivering FCF to their owners.
Next pretty picture - but not as obvious what it means. I use this Resource size (converted to LCE because I also have Brine and clay assets and that is the common measurement) and look at my lithium portfolio for hardrock assets in this way.
I divide the total LCE of the asset by the Enterprise value of the owner to come up with #Kg for each US$1 of EV.
By way of example the easiest part to look at, are the companies in Development - LLL and LTR. When you look at the prior chart LTR wins the "size" battle hands down - grade about the same but LTR almost 2X the resource MT. I did this analysis over the weekend so EV (~US$3.7B) is post the ALB bid.
The resource did not change before ALB bid or after ALB bid - but the EV certainly did. Prior to bid it was running around US$2.2B which in turn made the LCE/EV ratio ~2.65Kg versus where it is now of 1.55Kg. When the bid for LTR gets raised again the LCE/EV ratio will reduce further. I get more Kg of LCE for each dollar ... but why. Is it undervalued. Was LTR undervalued prior to ALB bid and fairly valued now. That depends.
There's a lot to take in from that. Look at the producers. If I draw a line in the sand and say
"in my universe, PLS is the benchmark for a spodumene producer to attain" then immediately I would NOT CHASE SGML (or the other one that is less than PLS that I own).
It also suggests that SYA should increase its EV by US$350M (whatever that is in AUD/share ... ~$0.055) - so 25% undervalued - which would bring its LCE/EV in line with PLS. And if we think that PLS is undervalued then their LCE/EV will also go down as their EV increases ... and then obviously SYA would also further increase in value.
But that assumes all LCE production and locations are the same - which of course they are not. The investor has to understand the asset(s) going into the calculation and make adjustments - one easy example with LLL/LTR might be sovereign risk of Mali v Australia/WA.
A distraction from shorts and SP and OTAs and EBITDA and .....
(20min delay)