Its interesting to consider what the recent developments at ESS mean in relation to the fair value of GT1.
To recap for those unfamiliar with ESS, they have a 11.2Mt @ 1.16% resource near Mt Marion in WA. To get recoveries into the 70%'s from this ore body requires DMS, Flotation and Magnetic separation for a total capital cost of A$293m (including $36m contingency, ex working capital). The proposed mining cost is moderately expensive at A$1,030/t (US$721/t) for a 5.7% product. The scoping study identified a life of mine production target of 8.8Mt @ 1.11% so despite the small size a modest proportion of the JORC resource isn't economic at assumed prices. The scoping study was annual production of 194kt @ 5.7%. ESS is ahead of GT1 in that they have a mining licence and have released a scoping study. They are behind GT1 in that their more complex build means estimated first production was scheduled for Jan2026 compared to GT1's 2H 2025. Like GT1, ESS don't have finance sorted and have no off-takes. ESS had $8.7m cash at 31 March the takeover report put a $11.3m preferred valuation on assets outside the JORC resource. This means that ESS's market cap less $20m is the markets valuation of the JORC resource. Like GT1, its a 100% owned project.
Mineral Resources just announced a 19.55% stake which appears likely to be a precursor to a competitive bid. At A$0.58 their market cap is A$147m valuing the lithium resources at $127m (and 11.2*1.16=12.99). Each 1Mt @ 1.0% is being valued at approximately A$13m. This may well increase if Min Res puts in a bit at the 60-70c range. This should become clearer on Monday.
GT1 has its 9.9Mt @ 1.04% that will increase with the Seymour and McCombe resource upgrades. The grade may well increase but I'm not factoring that in here. Cash balances at Dec were $29.8m but will have decreased. Given GT1 is DMS only, a higher valuation to resource multiple than A$13m/mt @ 1% would appear applicable. Even if it weren't and even if the McCombe/seymour resource upgrade is only to 15Mt @ 1% (I think it would be higher), this implies GT1's market cap could be $215m. This $215m figure is 15Mt * $13m + $20m cash allowing for existing exploration to have reduced cash balances. Given GT1's shares on issue this then equates to 80c/share. If the JORC resource becomes 20Mt@1% (or
[email protected]%) and a 20% premium is considered applicable to ESS's multiple due to being DMS only, you start to get market comparable values like A$1.30/share.
GT1 is looking rather cheap. Also this approach incidentally values GT1's hydroxide ambitions at zero and places no value on exploration tenements beyond the JORC assumption made.
