The company has a goal of 100kt LCE pa an.Now there are two ways...

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08/09/20

21:53

Post #: 47187941
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Originally posted by Mturns: ↑

Been a while but kept meaning to come back to this.

If I look at the "high case" from the latest feasibility study (assume we're an investor certain on future lithium demand consistently outstripping supply) it gives an NAV of around $1.8B (10% discount rate which is industry standard). Let's also assume somehow everything works out perfectly and GXY manage to fully self fund - we'd be looking at a share price of around $4.40. Now I'd have to apply a discount rate of around 0.8 at least due to the inherent risks associated with operating in Argentina.
So we're at $3.50.
James Bay is a bit of an unknown at this stage so let's optimistically assign $2 per share (far too early and too little known to assign anything north of this).
So we're at $5.50 on what I would consider all the stars aligning.
I think it's also important to note that if GXY can't self fund then someone is going to want a healthy share of that $1.8B - maybe we'd end up $4?

Anyway, I'd be really interested to hear people's thoughts on whether you think I've missed anything obvious here, but I just can't work out logically how some people's $8-$10 future valuations come about?

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The company has a goal of 100kt LCE pa an.

Now there are two ways you can value this annual supply:

1: What china tell you to via spot pricing, or;

2: what OEM are prepare to pay to secure supply

The longer both wait the higher the valuation according to theory.

Good luck and not advice.

GXY Price at posting: $1.36 Sentiment: Buy Disclosure: Held
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0 Great analysis

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