You could factor in a higher price due to the gradual upcurve of...

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Hensabens

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22/12/23

18:50

Post #: 71597182
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Originally posted by yaschmidt: ↑

Fair point. Here's the logic I'm basing my investment on:
We’re essentially at 680,000 tonnes per annum of production. I believe that the spod price for SC6 this fiscal year will likely be an average of U$1,700 per tonne for this year, based on my OPINION that I believe we are close or even at the bottom of the current swing (at U$1,400 per tonne), we will take a while building upward momentum, and by the Summer we will be back over U$2,000 – that’s a post of its’ own.

The latest data for costs, from the FY23 Annual Report, was A$613 per tonne (FOB), A$1,091 per tonne with freight and royalties. As an aside, since selling prices are down so much, this year, royalties will be down significantly, probably below A$1,000, but I’ll use A$1,000 to be conservative and make the math a bit easier.

At U$1,700 per tonne for SC6, our SC5.3 should fetch U$1,502 per tonne. 680,000 tonnes per annum will bring a bit over U$1B, translating to A$1.5B. All-in cost for the year will be right around A$680M, yielding a profit in the neighborhood of A$820M.

I don't put much stock in the POSCO JV generating any profits until halfway through FY26, with commissioning and ramp-up of both trains, plus servicing debt. By FY27, with both trains commissioned and LiOH pricing probably in the $25,000 to $30,000 per tonne range, the JV could easily be generating over U$1B in revenue and U$500M in profit, hopefully 30% of which will belong to PLS, by then. Assuming the U$:A$ rate remains at approximately 1.5, that's approximately A$225M per annum of profit, but that's still a few years out.

With almost 3.1B shares outstanding, that A$820M profit works out to EPS of approximately A$0.26. As of today (source: Simply Wall Street), the average P/E for the Mining Industry is actually 21.2. The three year average for the industry is 19.5x.

Using that three year average, to stay conservative, a P/E of 19.5 applied to earnings of A$0.26 yields a fair target price of approximately A$5.07.

Next year we can expect improved production, and in two years, we should be approaching the 1 MTPA mark for spod production, we will be out of the South Pit, which will increase Tantalite production significantly, and the POSCO JV should start producing profits, so I feel we can safely assume our numbers will only improve.

Of course, we may all be surprised by SC6 pricing, in either direction, but at these (current) levels, I think it is actually more likely that we are surprised to the upside. When investing my money, I like to keep my projections conservative, hence the outline above.

Best regards,

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You could factor in a higher price due to the gradual upcurve of lithium demand and shares being highly sought after to be set for a likely bull market at some stage. Orgs will want to be set and ready. PLS is numero uno

PLS Price at posting: $3.83 Sentiment: Buy Disclosure: Held
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Last $3.25		Change 0.110(3.50%)		Mkt cap ! $9.781B

Open	High	Low	Value	Volume
$3.17	$3.27	$3.14	$121.7M	37.76M

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No.	Vol.	Price($)
53	453908	$3.25

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Price($)	Vol.	No.
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No.	Vol.	Price($)
54	368705	3.250
36	230194	3.240
25	379175	3.230
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28	510838	3.210

Price($)	Vol.	No.
3.260	223913	49
3.270	266878	28
3.280	215523	24
3.290	268214	16
3.300	238828	20

Last trade - 15.50pm 18/06/2024 (20 minute delay)


Last $3.26		Change 0.110 ( 3.95 %)
Open	High	Low	Volume
$3.18	$3.27	$3.14	11485677
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