I'd also say he pissed off because with the share price where it...

I'd also say he pissed off because with the share price where it is presently causes higher dilution when accessing the capital markets.



And no I'm not downramping, GT1 is quite clear that it will continue to use the Canadian "flow-through shares" provision under Canadian tax law to underpin the necessary exploration (and infill) drilling to increase the MRE. While its not non-dilutive it is lesser dilutive than raising equity outside of that method.

Not sure how much time people have spent with the PEA itself. There are many things we could talk about but I'll focus (and really just on stage 1 "Seymour" Mine & Concentrator) on 3 key things

1. Mine Life is very very important - did I stress that enough - its very important. The last thing strategic investors into the project will want to see happen is that there is insufficient resource to operate an "integrated project" for 20 - 30 years. Its a long term capital commitment to build and operate a Hydroxide refinery. Uncertainty (in this case regarding Resource size and quality (how much is measured and indicated)) in my view is a constraint on the share price now more than ever. The MRE uncertainty is only solved by drilling which GT1 is doing.

"The PEA draws on the Mineral Resource Estimates of the Seymour Lithium Project, amounting to 10.3 million metric tons at 1.03% Li2O (comprised of 6.1 Mt at 1.25% Li20 indicated and 4.2 at 0.7% Li20 inferred) and the Root Lithium Project, with a Mineral Resource Estimate of 14.6 million metric tons at 1.21% comprised of 9.4Mt @ 1.30% Li20 Indicated and 5.2Mt at 1.03% Li2O Inferred)."


2. Commodity price. The PEA used ASP LoM (15yrs) for SC5.5 of ~US$2,029 FOB Thunder Bay with yearly averages as follows:



Those assumptions are considerably higher than present pricing ... and "investors" are always happy to discount against such numbers (which would have looked great at the beginning of 2023 ... but such is life).

So a paring knife gets taken to this and say the overall project average annual EBITDA project of ~US$232M gets cut in half to say US$115M



The other thing that happens - sector wide - is that EBITDA multiples get slashed ... so maybe now, at this point in time it may be that a near term development project may trade at EV of 4X EBITDA ... so GT1 has EV = ~US$450M

Note I said EV ... now we have to visit the balance sheet and capital structure ... which is not surprisingly point 3


3. The PEA assumes that GT1 owns 100% of the project when project level economic analysis is done - obviously because you need to see what it is to "sell it" to potential partners - and again I'm staying at Stage 1 only (so not the refinery). Seymour has the hallmarks of a very good project ... DMS only meaning low(er) Capex and simple flowsheet (no floatation).

So IF (and its only an IF and if you disagree with "my if" that's fine, I'm just putting it out there) we accept GT1 EV could be worth US$450M (call it AUD$675M) why is the present Market Cap just AUD$75M? Here's my thinking.

Again I'm only looking at value coming from Stage 1 ... if you can't get stage 1 done there is no stage 2 or 3.

Seymour full Capex (inc pre-production and contingency) runs around CAD$282M confidence +/- 20% ... so I'll work with +20% (who ever heard of being under budget) meaning CAD$282 *1.2 * .75 (FX) = ~US$254M (switching to US$) of which pre-production is about US$60M or ~AUD $90)

Also in the PEA is this:

If I assume a 50/50 D/E ratio on this component then I'm raising ~AUD$50M and unfortunately the SP is what it is and I may only be able to do that at AUD$0.20 per share. That would add 250M shares (so that's close to doubling SOI). Add that to what we have now puts us to over 500M SOI and if I add options and performance rights plus some for flow-through we could easily be at 600M SOI. And we've added $50M in debt on GT1's balance sheet.

Now here comes "the leap of faith". LG Chem saw the light (they've seen the light on quite a few projects). IMO we have a very solid 40% "in safe hands" of LG, LAC, Primero, Waratah, AMCI Resources and Mgmt. I don't see any difficulty for GT1 to raise the equity for predevelopment costs

To be clear, the focus here is on the "asset level investment" (which translates to a sell-down of certain % of the Seymour mine/concentrate project).


This is further explained by the following:



So the question is how much and how many. I will simply use 2 Partners (LG & an OEM) and each takes 25% stake in the project. Very very simply if the total capital for Capex is ~US$260M (rounding up) and $60M is pre-development costs (which we've raised funds with equity and debt already) leaves ~US$200 left to fund. And it looks like half of that is intended to be debt. So the PROJECT (not GT1) requires "equity" of $100M. And so simply put the notion is GT1 is able to sell a 25% interest at the asset level for US$50M to say LG and an OEM. That fullly funds Seymour. Not trying to figure out if that's fair, cheap or expensive. It's a placeholder at the moment.

What it does mean though is, it is not necessary to sell additional equity at the Topco level. But the most important thing is, to get here I had to sell off 50% of the asset ownership .... meaning I do get 100% of the EBITDA I get 50% of it ,,, in this case the US$115M for 100% becomes say US$55M in EBITDA and at a 4x puts the EV at US$220M ... AUD$330M. Don't forget included in the EV is debt of AUD$50M so the MC drops to AUD$270M. And to finish it off, we add a fair amount of new shares ... figuring SOI will be ~600M by time construction starts.

All all that translates to SP = $0.45 .... ouch. There was a lot of markdowns and discounts to estimates etc to intentionally remove rose colored glasses.

Having said all of the above I'm looking to add more to my holdings acquired during May and June 2022 (so deep in the red). This company is fundamentally in much better shape now (but of course the lithium market has changed quickly from deficit to surplus (or so it is said)) but you know its a case of being l"ong and wrong" presently. IMO, this (electrification via battery) is a secular change (driving a PHEV and a home with solar/battery (TSLA Powerwall). It is a big change.

Sorry for the length - probably TL/DR for many.