Since Goldman Sachs has the undisputed, I would almost say...

Since Goldman Sachs has the undisputed, I would almost say unique, expertise in the lithium sector, I would like to discuss a recently published Bubblechart with you.

Source:https://x.com/drauwsy/status/1838058567170965818



Admittedly, I'm not the brightest candle on the cake, so I'm pleased when I'm given a professional overview of the lithium sector via such charts, resulting from the exceptional expertise of respected Global Investment Research department.Unfortunately, as is so often the case, due to a lack of intellectual access, I did not understand some points and am somewhat confused.What I did understand is (to be read in the small print) ‘EV/Resource metric not indicative of project economics’

Among other things, I did not understand the following points:

1. POSCO brine(centre,right) At the time of publication, POSCO's EV was approx. 30 billion.It is therefore mathematically correct to estimate the EV per tonne of the Brine lithium resource at approx. 14,000 US $!

I'm not sure, but isn't it the case that POSCO also has additional income (perhaps only a small amount) from other business areas such as the steel business? According to its own statements’... the most competitive steelmaker globally’

2.) Rio brine(below Posco) The publication was before the Allkem deal, so only the ‘Rincon’ resource was valued. EV per tonne of the Brine lithium resource approx. 6,500 US $. That would mean an EV of approx. 52 billion on the basis of the lithium resource. With Rio Tinto, I know for a fact that they have other side businesses besides lithium. Since Rio had an EV of about $107bn at the time of publication, I'm not sure if the valuation for their lithium resource is too high or too low?

2.1) I only use measured & indicated(notinferred) for resources in my valuation models. Accordingly, my value in these categories for Rincon would be 5.8 kt.Goldman Sachs has used a value of 8.1 kt as a basis. According to my information (PEA), an additional 6.0 kt are shown in the ‘inferred’ category. So either the value for measured, indicated, inferred is 12.8 kt or for measured & indicated only 5.8 kt and not 8.1 kt
Does anyone have an explanation for this enormous discrepancy?

3.) Eramet brine, to avoid any confusion I assume that the resource of the wholly owned subsidiary ERAMINE is meant. The author values it at approx. 800 US $ / t. The lithium content is only marginally lower than at Rio. But this still values the EV of the lithium resource at almost US$ 4 billion.The EV of the parent company Eramet was only US$ 2.2 billion.
Is there an explanation for this?

I could go on in a similar vein here, but then I would end up with at least 20.)

4.) Now we come to Galan, which according to the chart is valued at around US$50 per tonne. Goldman Sachs uses a resource size of 7.2 kt. Again, I don't know how they arrived at this figure. If I take the data based on DFS (after the last resource upgrade), I come up with 7.03 kt in the measured and indicated category. At today's prices, this would be equivalent to an EV/t of approximately US$11.5/t (in a simplified calculation based on market capitalisation). The EV calculation for Galan is simpler than for corporate groups, as only market capitalisation can be used and other variables such as the value of debt (bonds and bank loans), other liabilities and cash and cash equivalents can be ignored.At the time of publication, around 4 weeks ago, the EV was around US$7 / toThat would be a valuation discrepancy of over 700% for the EV alone.
Where do I go wrong here?

On X, the bubble pope hoopz, @HOOPZ if you're still reading here I'd appreciate a comment, has already criticised something else about the diagram.
Quote: „ LOL... They are still equating 1% Lithium Oxide (Li₂O) in Hard Rock with 1,000mg/L Lithium (Li) in Brine. Why do they do this? Because 1% seems to match 1,000mg/L i.e. 1 = 1? It makes absolutely no sense to present the data like this. They have no idea about Lithium.“In my humble understanding, he is right. However, as I am an extreme believer in authority, I at least doubt my criticism of the beautiful bubble chart from Goldman Sachs Research.It would be nice if anybody could help me with my misinterpretations.