General Discussion, page-3333

Leo is seriously undervalued and that is why I have been buying early 50s late 40s.

If you take a look at our peers

You have LTR which have completed FID but will encounter significant labour shortage and delays, not fully funded, cost blow outs, valued at 3.3B

Sigma who are in production this quarter.
270,000tpa ramping up significantly to over 700ktpa, plus further expansions. They are valued at 4.2B AUD

I also believe Sigma and some current producers are also valued cheap. While I typically invest in the junior end I recently took a position in SQM in the recent dip and already up 20%. Will look to invest in Sigma but only if it gets cheaper.

Another peer could be PMT valued close to 2B with no maiden resource. located in Canada. looks to have at least 156Mt and very high grade but Leo will be cashing in on the party well before them and will have a significant head start on higher prices.

Leo will be producing 500ktpa in less than 18months time.

Here is SGML price forecast included from an article published Dec 2022
https://www.prnewswire.com/news-releases/sigma-lithium-achieves-outstanding-project-expansion-and-financing-milestones-increases-mineral-reserves-by-63-triples-npv-to-us-15-3-billion-and-secures-us-100-million-debt-financing-301694114.html


Year one is 2023 as Sigma start production

Say we use average 5 year prices Y3 to Y7 = $4866 USD
20% increase in AISC due to inflation = $418 USD
500,000t x avg price minus AISC = $2.22B USD
Assuming Mali govt take both options for 20% and Leo has a share of 40%
As well as including Mali's corporate tax rate of 30%
Leo will be making $662m USD profit or 934m AUD in its first 18 months to two years of production
This is being conservative using a price that is lower then what Leo should achieve if production timelines are met.

Say we take average price of $4141 (5 year prices Y4-Y8)
Using the same 20% adjusted AISC
but 4.0mtpa or 830,000tpa (stage 2)
- Stage two is meant to be commissioned 18 months after Stage 1 commences
Leo will be banking 1.69B AUD per year for the next 5 years after commissioning stage 2!270m usd capex +20% and converted to AUD = 550m (Leo's share 50% being $225m) Paid off Years 1 and 2.

Now there could always be disruptions due its jurisdiction but most of the risk of being in Africa is related to govt and permitting issues as well as financing. With construction already underway and DSO shipments later this year this project shows little risk. Atleast in my opinion anyway. Why we don't see a high valuation now is due to investors in stocks such as AVZ and others, who have burnt in the past, therefore will never invest in Africa again, regardless of which country in Africa it is located. I dare say the African discount will start to narrow down considerably once in production.

I'm wondering what the market will value Leo midway in 2028 with over 6.5B (not accounting for dividend) in cash and no debt?

If all goes well I'd say 10x from here is easily doable by 2025-2026 with a market cap 7.8B