News: ORE INSIGHT-Electric car revolution brightens outlook for a medley of metals, page-32

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butcherboy

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10/10/16

09:06

Post #: 19736051
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Originally posted by DoctorFouad ↑

I think we should also take into consideration that whatever profits olaroz lithium project will generate, sould be shared between the joint venture partners : Orocobre (66.5%), Toyota Tsushu (25.0%) and JEMSE Argentina (8.5%).

If we assume in 2017 :
-17.500tpa nameplate production of high quality lithium carbonate (99.90%+)
-Average price of 12.000$ per tonne
-Average All-In-Sustaining costs of 3500$ per tonne

That is roughly some 150Million$ earnings for the whole joint venture, if we subtract some 40Million $ debt repayment, we end up at 110 Million$ earnings before taxes.

Orocobre's 66.5% share : 73 Million$ before Taxes. Assuming an average of 20% taxes (what is the tax rate in argentina ? and should orocobre pay taxes in Australia too ? any insights are much appreciated), we end up at some : 50Million$ Net Profits for Orocobre (if everything goes perfectly well).

At 10x earnings that is 500M$ fair market cap. At 15x earnings that is some 750M$ fair market cap.

According to these simplified calculations, Orocobre is fairly valued at the moment (and most probably other lithium juniors are extremely overvalued like galaxy, and pilbara).

So again it seems to me the only way the stock price could substantially go up is through a future expansion. Because at 17.500tpa a 700M$ current market cap is right on the money.

Expand

Queue the expansion study for an increase to between 35k and 42k tpa production.

Last edited by butcherboy: 10/10/16

ORE Price at posting: $3.32 Sentiment: Buy Disclosure: Held
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News: ORE INSIGHT-Electric car revolution brightens outlook for a medley of metals, page-32

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