Recap of three very recent M&A's offers, two of which were made at a time of current lithium prices. Please correct any omissions/errors. I've ignored any current cash positions which might reduce $/t LCE calculations based on EV excluding cash holdings.
LTR Advanced hard rock deposit. $6.6bill offer (withdrawn due to "complexities" resulting from Gina's stake) for 5.4mill t LCE Kathleen River deposit. A$1,222/t LCE.
LPI Advanced Brine deposit in Chile, with a threat of nationalisation and at least a forced JV with Codelco for Chilean projects making other offers less likely and removing any bargaining power. $385mill for $1.9mt A$202/t LCE.
AZS early stage hard rock. No JORC, Exploration target based on extensive drilling. Mid point of ET is 170millt at 1.25% for 5.2mt LCE. Project valued at A$2.6bill for 5.2mt LCE (midpoint of exploration target). A$495/t LCE
Different project status, different countries/country risk and a mix of hard rock/ brine gives a broad range of valuations. In summary; Company LCE $/t LCE LTR 5.4mt LCE $1,222/t JORC, advanced hard rock/ safe country LPI 1.9mt LCE $202/t JORC, advanced brine/ high country risk AZS 5.2mt LCE $495/t No JORC, early stage hard rock/ safe country
So what is Phoenix worth? Phoenix 12.4mt LCE $/t? JORC (with 1.9mt reserve) brine/ safe country, ideal location for US IRA incentives.
Phoenix has more than double the resource size of either Liontown or Azure, for scale and very long project life. Location is ideal for US IRA incentives. Brine grade is relatively high at over 437ppm. Just the 1.9mt reserve offers 27 years at up to 70,000tpa LCE production. Area is serviced by roads/rail/port. Exxon has a high regard for brine with DLE potential - I recently posted the AFR podcast on lithium linked below. From 17 minutes it discusses DLE and how Exxon Mobil believes it will displace or at least be cheaper and more efficient than both the current hard rock and evaporation pond methods of production. Exxon's market cap is larger than BHP, Rio and Glencore combined.
Phoenix is more than double the size of LTR and AZS for LCE resources. Australia is the world's largest lithium producer. For comparison of Phoenix's resource, the chart below shows the two largest Australia lithium deposits (on the RHS) which are very similar size to Phoenix's East Brawley. Greenbushes is the only larger project and only marginally larger at 12.9mt vs 12.4mt but that project is shared between three owners. East Brawley is 100% owned by Phoenix.
So what valuation for Phoenix? Two of the above three takeover offers were made very recently so reflect current pricing expectations. LTR is advanced and its $1,222/t was a great offer, well above the others so perhaps an outlier. LTR's offer was made a little earlier but even after the sp dropped when the offer was withdrawn, its current mc still values its LCE at around $740/t without the takeover premium. Considering the high risk nature of LPI's deposit in Chile as well as the smaller scale (although high grade), I would think that Phoenix should attract a significantly higher valuation than LPI's $202/t. AZS's project is very early stage with only an exploration target but still has an offer valuing it at a ball park $495/t for mid point of the exploration target. Hard rock is broadly considered lower risk for now compared to DLE but Exxon Mobil has a preference for DLE over hard rock and sees it as the future in terms of financial viability and scale. DLE will potentially displace hard rock and evaporation production for cost and environmental reasons. So very hard to guess how the market would value our ideally located, very long life, very large scale East Brawley deposit. Is somewhere between $250 and $450/t a reasonable range? A$250/t LCE equates to around US$2bill valuation. A$450/t LCE equates to around US$3.5bill valuation.
