"In December 2021, Rio Tinto acquired the Rincon lithium project in Argentina for US$825 million. Rincon project has 11.8 million tonnes LCE resource with average grade of 367 mg/L. This means Rincon resource is 30% smaller than Phoenix Lithium"
11.8Mt versus 12.4Mt LCE. Rincon's LCE is only 4.8% smaller, not 30% by my calculations but Phoenix's grade is 19% higher. Phoenix also has a very high proportion of its resource in the indicated category which is also an important factor. You didn't include the comparable figure for Rincon so I don't know how that compares.
Then there is the time factor. Three of the largest ASX listed lithium stocks are up 67%, 45% and 72% compared to their approx average prices in Dec 2021. That's an average increase value of 61%. PLS is planning downstream operations and all three might have increased resources or other reason for sp appreciation but it probably helps that they are all up strongly from their 2021 prices when comparing how Phoenix might be valued relative to Rincon in Dec 2021. However Albermale which is the world's largest miner, fell roughly 5% over the same period, while SQM, the second largest gained 34%. It's quite possible that our local producers are benefiting from the falling AUD which increases their earnings converted back into AUD. US producers don't have that benefit. The AUD was 72c in Dec 2021 so has fallen around 10%. Expectations on AUD over the next few years will play a role too. I think it could head much lower on lower iron ore and thermal coal export dollars with maybe some short term reprieve if China tries to stimulate its economy.
However, I think the best guide is still the valuation range discussed in the webinar. The range was wide, from A$104/t LCE to A$516/t LCE. If you want to take the average of that range which is A$310/t LCE, multiply by 12.4Mt, we get a valuation of A$3.84bill or US$2.5bill. That's around fifty times return on our seed capital investment. At A$250/t LCE, it's US$2bill or around 40 times our investment.
