In order to get an idea as to Goulamina’s valuation, we tend to compare it to AVZ, LTR etc. Whilst these 2 stocks aren’t at the upper end of valuations (eg PLL), in order to get a minimum valuation I thought I’d compare it to Prospect Resources PSC, which is what I consider to be the 2nd most under valued lithium stock after us at a similar stage.
PSC has completed their DFS, are fully permitted (like us) and are working on finance etc.
I’ve put the DFS figures in the table below,
They own 70% of their project, we have 90% (possibly 80% but would sell that extra 10%).
Their project is in Zimbabwe which I’d consider to be a higher risk than Mali.
Our NPV is 75% higher than theirs,
Our resource is only 50% bigger, but with the higher grade would be double the LCE
Our planned production is 150% more
Our capex is 20% higher (but for 150% more production)
Our opex is 18% lower
The only place they beat us is IRR, which is hard to understand given the other numbers. Although IRR is useful, I don’t put too much weight on this, as an extreme example. Would you prefer a $1m project with a 50% IRR or a $5b project with a 30% IRR.
They also have offtakes for 72% of their planned production. Offtakes are useful for financing, however smaller companies tend to get screwed in these deals, so I’d prefer to be in our position and have 100% of our production available to any potential buyers/partners in the data room.
PSC have a current market cap of $70m @ 21c.
Given the above figures, at a bare minimum Goulamina should be double their market cap based on NPV & Resource size/grade alone. Then add in the ownership percentage differences, and the other metrics in the table below (many of which are built in to NPV) I think double their market cap would be ultra conservative.
$140m is what I’d call a bare minimum. That values our gold at $40m
It’s just my opinion PSC is the 2nd most undervalued lithium hard rock stock, I’d be happy to hear about any other undervalued stocks at a similar stage.
|
Column 1 |
Column 2 |
Column 3 |
Column 4 |
0 |
|
FFX - Goulamina |
PSC |
% difference |
1 |
Project ownership % |
90 |
70 |
|
2 |
Market cap A$m |
?? |
70 |
|
3 |
Resource mt / % Li |
108.5 @ 1.45 |
72.7 @ 1.11 |
49% |
4 |
Planned production |
436 |
173 |
150% |
5 |
Opex USD/t |
281 |
344 |
18% |
6 |
Capex USD |
194 |
162 |
20% |
7 |
NPV pre tax |
$1.234b |
$710 |
74% |
8 |
IRR pre tax % |
56 |
71 |
|
9 |
|
|
|
|