Excellent summary of the current situation. Once the project is...

Excellent summary of the current situation.

Once the project is de-risked with a clear path to production, with financing & offtake squared away, and a partner providing technical support, we will see a huge value unlock as the market will now value the project as if it is actually going ahead instead of our current shell valuation.

Some insight into how the market could value it...

From the Goulamina DFS, the project delivers outstanding returns with a pre-tax NPV of A$1.7 billion.

This is largely due to the project's lowest cost quartile cash costs of $281/t.

NPV was calculated at $666/t SC6 price - current price $720/t, Morgan Stanley reckons price is going to $1,000/t.

LOM is 23 years when producing at 2.3Mtpa (436ktpa SC6), however the resource of ~108Mt indicates we have well over 50 years of potential mine life at the project.

That $1.7B NPV will become >$4B NPV if the project gets scaled up to a 5Mtpa, >20 year operation, which will be required if lithium demand continues on trend.

Add in secondary processing and that $4B NPV has the potential to double again.


"Don't forget the gold"

Upon release of the Morila "Life Of Mine Plan", Sprott valued the company at 70c.

I would say that is a fair valuation today based on the LOMP in isolation, however it is pretty easy to see that the LOMP is essentially a conservative plan 1 for stage 1 of operations.

Average production of 160kozpa will be surpassed and ultimately exceed 300kozpa once the SAG Mill is reconfigured and underground mining is established.

At that point, AISC will drop from current ~$1,100 to <$800 (assuming no grade improvements).

LOM is currently ~10 years but the resource is capable of delivering ~20 years - drill results are indicating that there is gold everywhere so it wouldn't be silly to think that this couldn't double again.

More shallow and high grade hits i.e. like we see at Pit 5 improve the project again, lowering stripping costs, lowering OPEX and increasing revenue & profit.

This ignores the surrounding gold field that is turning up gold everywhere we drill, Ntiola, Viper, Koting, Domba, K2, K3, K4 etc...

Once debt facility is organised (in coming weeks), no need to CR is established etc will all provide further upside to Sprott's current valuation. Don't forget price of gold on the rise, M&A opportunities...

300kozpa at <$800/oz AISC with a >20 year LOM... what would fair value be for that? NPV would be well above $2B.