Mick, I liked these assertions also:
Capital Costs
Our suspicion is that these estimates are to the high side, particularly for the ponds, and we would not be surprised to see them come down in actuality.
and
The Chilean government is currently reviewing a future regime for Lithium production for the country which will probably include a royalty structure. The consultants noted that MSB fully owns its mineral concessions and, as such, would not be exposed to additional payments such as long term lease payments similar to those that CORFO, owner of the Atacama Salar, collects from SQM and Albemarle. For the PEA, a conservative potential royalty rate was applied for the project of 7.5% of sales.
The economics would be substantially enhanced from those published in the PEA should the royalty actually come in closer to the 1% of sales mentioned earlier.
Off Take Agreement
- When we visited the site most of the talk was of the potential for Japanese traders and battery producers funding the project to ensure a share of the offtake. This need was particularly acute after the Japanese were wrong-footed with the flow of product from Galaxy in Australia. However, again it might prove to be the case that torpor in Japanese management lets the prize go to the Chinese.
and
- Financing is not coming from markets but from end-users or processors. In the case of Lithium Power we would see the offtaker being Japanese as the Chinese have seriously wrong-footed the Japanese (witness the Galaxy “bait and switch” with Mitsubishi).
Significance of BRZ - love this one
'While Bearing has a free carry until LPI’s expenditure commitment is fulfilled (around $9mn is still required to be spent) after that point Bearing will have to invest pro-rata in all works, or face dilution. The recent financing by LPI makes BRZ’s dilution now a certainty.
This stock is clearly over-valued in comparison to LPI. If one puts an enterprise value of $52mn (market cap plus cash plus residual share of LPI earn-in) on BRZ for a 17.7% stake then LPI with 50% of the project should have an enterprise value of nearly $160mn, which is 50% higher than its current valuation.'
and
'The Fading Relevance of Bearing Resources
This TSX-V listed entity is the final resting place (well, for now) of the remnant of the Li3 stake in the Maricunga project. It currently has a market capitalization of around CAD$44mn. In September of 2017 it received approval to acquire via a stock issuance all the shares of Li3 Energy Inc. Assuming completion of the transactions contemplated by the Li3 Definitive Agreement, Bearing will hold an undivided 17.7% interest in the project, with Lithium Power International earning into the project by funding project expenditures to through to the delivery of a Definitive Feasibility Study. The talks to cement the Li3 takeover dragged on for around a year with the stock of BRZ peaking at over $1.50 per share in February and now standing at just over half that level. While Bearing has a free carry until LPI’s expenditure commitment is fulfilled (around $9mn is still required to be spent) after that point Bearing will have to invest pro-rata in all works, or face dilution. The recent financing by LPI makes BRZ’s dilution now a certainty.
This stock is clearly over-valued in comparison to LPI. If one puts an enterprise value of $52mn (market cap plus cash plus residual share of LPI earn-in) on BRZ for a 17.7% stake
then LPI with 50% of the project should have an enterprise value of nearly $160mn, which is 50% higher than its current valuation.'
Cheers.
