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20.0¢ firefinch limited

If we want to do peer comparisons:...

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MinerTrader

422 Posts.

721

08/04/21

14:19

Post #: 52332111

Originally posted by Red Baron: ↑
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.

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

Expand
If we want to do peer comparisons: https://docs.google.com/spreadsheets/u/3/d/1hnfM3dwXPStNb6x7aC8D4NA8G2JhS23amSL63orw9Y8/edit?usp=drive_web&ouid=100889122036883028155 (All information is open sourced and linked to public announcements, I have recently updated to fix for ownership in EV calcs).

Based on Resource alone: You get a share price of $0.58 based on peers or based just on PSC $0.18/share. Where can you get a 2.2Moz gold resource for $36m ($0.05/share eq or $16/oz with a gold mill)?

Based on Mineable Reserve alone: You get a share price of $0.86 based on peers or based just on PSC $0.21/share. Where can you get a 2.2Moz gold resource for $14m ($0.02/share eq or $6/oz with a gold mill)?

Based on NPV alone: You get a share price of $0.53 based on peers or based just on PSC $0.12/share. Where can you get a 2.2Moz gold resource for $86m ($0.12/share eq or $39/oz with a gold mill)?

Smells to me like the lithium is not factored in at all. Even in the worst case scenario where its valued the same as INF and PSC (and it should be valued much more due to no liquidity restrictions, as both of these companies are likely undervalued)

The buy side is looking hungry, the sell side is looking malnourished. For this to 5x from here is trivial.

Bring on the price discovery....

Last edited by MinerTrader: 08/04/21

FFX Price at posting: 23.0¢ Sentiment: Buy Disclosure: Held

4 Great analysis

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