Blue sky assumptions could do with higher LT LCE pricing:
-Moving from $12/kg to $14/kg is significant
-Volume of LCE produced by SDV per year is also important. The nameplate says 25ktpa, but with the team that AT put together, I'd be really surprised if they were simply going to stop at 25ktpa. Thing with brine projects is that there is a greater ability to expand production facilities. Additional ramp up in my view to 35ktpa or to 50ktpa like the SQM/LAC stage 2 is in the plans
But most important of all is the PE the market is willing to take Galaxy to.
Albemarle went up 9.8% last night on some solid 4Q16 earnings.
Year ended Dec 2016 EPS at US$3.57 with SP now north of US100 gives them a PE of 28
Once we get some solid earnings from a full year of Mt Cattlin operations (i.e. wait for the CY17 results next year) Galaxy can expect to see an uplift in the PE
Right now average market consensus is 4cent EPS for CY17, which gives us a forward PE of 12.5. That is a very downbeat, undervalued PE for an ASX200 company.
GXY Price at posting:
50.0¢ Sentiment: Buy Disclosure: Held
