Hi all,
Just did a peer comparison of most advanced world class pre-production projects at PFS/DFS stages. LAC in my opinion has the best project economics with strong expansion potential and JV partnership with SQM, fully funded to production. It's as good as one can get, but the price is quite expensive at a EV of 700M (CAD) for a bit less than 50% of the Cauchari and their Nevada project. Next is NEO lithium, at an EV of 160M (CAD) the stock is at a very bargain price. Their low Mg/Li ratio places them at the bottom of the cost curve, very strong NPV, however these numbers are based on a target production of 35000 tpa for 20 years which I suspect is way too optimistic for the resource they have and a CAPEX of 589M. LPI's project economics is less attractive than the above two due to a high CAPEX compared to production capacity, however, as Martin confirmed with Mick on the phone they will try to bring the CAPEX down in DFS, and based on Hallgarten's new research report, they believe CAPEX can be reduced to $366M USD (LPI's share 183M) which will significantly improve payback period and IRR. It's hard to say Sal de Vida is overvalued/undervalued - Sal de Vida not Galaxy's main project. I think overall NEO and LPI is the most undervalued at their price, however both companies are unfunded yet maybe market is pricing in this risk.
Wanted to include Advantage Lithium and Millenial Lithium also but they are at appraisal stage, these numbers are not available.
|
Column 1 |
Column 2 |
Column 3 |
Column 4 |
Column 5 |
Column 6 |
Column 7 |
Column 8 |
Column 9 |
| 1 |
Project/Company
Stake %
|
Reserve (mt) LCE
(M+I&inferred)
|
exploration
potential
|
OPEX
$USD
|
CAPEX
$USD
|
Base case NPV
100% Ownership
$USD
|
Pay back period/IRR |
Production
Capacity(tpa)
|
Mine
life (yrs)
|
| 2 |
Cauchari/LAC
<50%
|
11.75 |
|
$2495 |
425M(S1)
425+220M(S2)
|
1266M Pre tax
803M Post tax
(@10% disc)
|
3Y5M
34% pre tax
28.4% post tax
|
25000(S1)
50000(S2)
|
40 |
| 3 |
Maricunga/LPI
50%
|
2.15 |
1.75 |
$2635 |
527M |
1049M pre tax
731M Post tax
(@8%)
|
3Y3M/20.4% pre tax
2Y11M/23.4% post tax
|
20000 |
20 |
| 4 |
3Q/NLC
100%
|
1.22 |
2.24 |
$2791 |
589M |
1792M Pre tax
1128M Post tax
(@8%)
|
Y
24.4% pre tax
29.4% post tax
|
35000 |
20 |
| 5 |
Sal de Vida/GXY
100%
|
7.23 |
|
$3369 |
376M |
1416M Post tax
(@8% Disc)
|
2Y10M
34.6% post tax
|
25000 |
40 |
In my view the above companies will survive in a tight market and shine in a good market as they all have world class proven resources with their feasibility study done by industry leaders (Worley Parsons, GHD etc). Advice from Jow Lowry is "invest in quality! " He also believes investing in small Argentina lithium projects will end in the next trail of tears for the investors as there are a lot of junk options. From my observations, quality companies takes the only proven path to production. So whether to invest in the above companies or have your money a long shot in the dark in the dodgy ASX small cap lithium companies who claim they are doing it "the unconventional approach to production" be careful, chances are that they won't succeed.
Source:
http://lithiumamericas.com/companies/cauchari-olaroz/
http://www.jefferies.com/CMSFiles/Jefferies.com/files/Lithium Americas Corp.pdf
http://s22.q4cdn.com/158019878/file...rate-Presentation-Jan-8-PresentationV3-CV.pdf
https://www.asx.com.au/asxpdf/20171219/pdf/43q90pkxqm2qh9.pdf
http://s22.q4cdn.com/158019878/files/doc_downloads/key_documents/PEA-NeoLithiumCorp.pdf
http://www.galaxylithium.com/projects/sal-de-vida
http://www.galaxylithium.com/Investor/reports/170122canaccord.pdf
https://www.asx.com.au/asxpdf/20160822/pdf/439hfb9zq8bpwp.pdf
