WA peer is valued at 3 times of the LLL over percentage of the DFS, is that not enough discount? Why is every negative news in other country in Africa related to LLL? AVZ's Manono is definitely the world largest hard rock deposit, the ownership problem is due to its historical transactions. The project initially was held by MMCS, which had a court case with AVZ, then Chinese business Mr Cong got the project, sold to AVZ, after that, also few transactions happened, now Chinese is desperate for more lithium, then Zijin is sneaky and bought 15% from another partner which didn't obtain AVZ's consent. The big issues are they had ownership dispute from the beginning, then Mr Cong was former employee of Zijin and he's a well connected person. Anyway, I think they will sort out their ownership issue, at the cost of delaying the project coming online.
WA location is good due to less sovereign risk, but not free of risks, high costs, PLS cost blowout, LTR cost blowout, Kwinana conversion plant cost blowout... It's mining friendly, but faces high standards of environmental impact assessment... Sometimes you can't get a permit for open mining, have to go underground, then increases costs.
Another risk, is technical know-how for WA players, lithium mining requires technical know-how. PLS had a hiccup during their commissioning time. Luckily LLL has one of the world's most experienced lithium producers as JV partner, they design floatation sheet and provide technical support. Ganfeng Boss said in a recent interview, they are currently focusing on mining construction in Argentina, Mali and Mexico, and want to bring these projects online as soon as possible.
RSG, a Mali gold producer has been operating in Mali over decades, their valuation doesn't have much African discount.
Recent transaction near LLL in Mali:
Chinese Hainan paid US$100m for 51% JV interest of Bougouni project which is around 30kms from Goulamina project, same ownership as Goulamina JV, Mali government will take 10% free carry plus 10% option to buy at market value, so Hainan interest in the lithium project will be reduced to 46% or 41%, then you calculate the consideration US$100m / 21.3Mt x 1.11% Li2O x 2.473 x 41% (lowest ownership) = US$417/t LCE
So LLL's lowest ownership 40% if government buy 5% at market price, then,
142.3Mt x 1.38% Li2O x 40% x 2.473 (conversion to LCE) x US$417/t LCE = US$810m / AUD$1,145m , implied 95.5c/share
Goulamina is 7 times bigger and high grade, and already in construction, should have a premium, imo.
All imo.
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