and continuing the discussion.
So even though we can convert our lepidolite deposit in LCE and compare on an LCE basis doing only that would not give you the "bigger picture".
In the "frame of the picture would be "location". This is JIMHO but our location is a DISADVANTAGE. Before anyone gets to excited and starts tossing rotten tomatoes, consider:
(A) Namibia ... not exactly a hot bed for
(1) Auto OEMs or any OEM that consumes LIBs
(2) Battery manufacturers of any kind
(3) Chemical conversion plants that consume low Li2O concentrate.
This makes LPD an "export only" business looking for a buyer of "2nd rate" concentrate. Yes A3 can be solved by building a chemical plant in Walvis Bay, Namibia
Just as an aside comparison, a (soon as in 2024) to be producer of SC6 for export from Africa is Atlantic Lithium (listed ALL on LSE) which has an OTA with NASDAQ (and ASX) listed PLL for 50% of its annual production (~300,000 tpy) which PLL will convert in ~30,000 tpy in a chemical plant to be constructed. Lets look at the ALL resource called Ewoyaa in Ghana.
The
headline in their PR
http://ir.q4europe.com/Tools/newsArticleHTML.aspx?solutionID=3674&customerKey=IronRidge&storyID=15373417advises
30.1 Mt and 1.26 Li2O. They also provide a discussion of "cut-off grade" which is very important -
"the resource can be reported at a significantly larger tonnage by reducing the cut-off grade to 0.2% Li2O, giving an increased resource of 39.3Mt at 1.02% Li2O. Conversely, the resource can be reported at a higher grade using a 0.8% Li2O cut-off for a resource of 27.8Mt at 1.31% Li2O." (my bolding). I'll use the 0.2% because LPD is at 0.15%
Applying same calculations
Li(t) = 39.3 Mt x 1.02% = 404,790 (Li2O) / 2.15 = ~ 188,274 (t)
LCE (t) = 188,274 (Li) x 5.32 = 1,001,619 (t)
So the contained Lithium resource is much much bigger (~8X) and ALL closed at MC of ~GBP320M or ~ AUD$560M
ALL.LSE = ~$560M (MC) & a resource of ~1,000,619t of LCE ... trades at multiple of $559.65 per tonne of LCE
which for anyone paying attention might you be getting "nervous"?
(B) To the picture itself then ...(1) IMO
@Kevo88 says it well
"LPDs value is in its extraction tech"- ....or I would put it as "much of LPD's value lies in its ability to commercialize its extraction technology. This doesn't necessarily mean we'll get more earnings via licensing that tech (anyone know what exactly is going on with Cornish Lithium?) and collecting a royalty on per tonne manufactured (but we might and that would be an almighty payoff) but it also means we make low Li2O% deposits potentially viable with potentially a "green advantage" - process itself is low heat etc etc. Still be a challenge IMO competing against an integrated SC6/LiOH plant using hydro power supplying a battery plant located nexy door supplying an EV OEM around the corner.
(2) By-Products & Capital Intensity ... generally not a good look but in LPD case the DFS has
"Competitive capital intensity of US$17,400/t LCE on by-product basis" ... huh what am I talking about? Ever hear the expression "Money Talks"? That's money talking. There's more to it than just NPV8 and IRR.
38% of total revenue comes from "by-products". I'd tend to call that "co-products" because without them this project is pretty much over. But those secondary products (caesium and rubidium) could be almost as important and more valuable than the primary product. And I believe (yet to confirm) that our proprietary extraction tech is the key.
Back to Capital Intensity ... first fully understand what it means using a simple example of a gold miner (who often produce valuable by products that are often sold off to others)
"Capital intensity can be evaluated on the basis of the capital allocated to each ounce of gold produced and on the basis of the capital per tonne per day of processing capacity. This results in capital intensities of approximately US$155 per ounce of gold produced and US$16,500 per tonne per day of capacity. Both are below the average for gold processing facilities involving crushing and milling."Again to re-iterate LPD CI is on by product basis (or co-product in my view).
Development Capital required US$121M (taking out contingency
divided by Tonnes of Product (LCE) produced = ~7,000t (converting 4,879t LiOH + 1,542 Rub + 246 Cae)
yields CI = ~US$17,285/t ... close enough
But how does it compare?
Lets compare to a non-spodumene deposit also with valuable by products in Europe (EMH.ASX if interested and I do not hold them). CI = ~$19,100
Cut from Shard Capital report
June 2019
EMH released a PFS update in Jan 2022 ... but nothing on CI and theyn't given an annual LCE output inclusive of by products so I wont bother going deeper ... if anyone feels the urge and does so ... please add it to the discussion.
So with all that in mind ... Phase 2 has CI ~$10,400 ... and that's exciting! And I can see why LTH would be "displeased" with mgmt progress to date as your capital has been burned to get us to this point - I would be too and I may share that pain in the future if they don't get it all up an running and putting P2 out there.
Good fortune to us I guess.
(20min delay)