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dfs1

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08/12/23

17:43

Post #: 71354033
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Originally posted by acwbagnall: ↑

There is no way this is running at anywhere near 3.3b EBITDA looking forwards though? The last quarter's revenue was $493m and this quarter will be substantially less - likely around half that depending on the realised price, which I would think will fall closer to $1500/tonne.
I fully agree that in the long term this is a solid aussie producer and I too have a stack of it in my super as a long term hold, but the reason for my post above digging up a conversation from early 2022 was that the software margins of that year led many to get very carried away with earnings and share price projections for this company. There was simply no way that lithium prices were going to be sustained at those levels forever, and this year has been a sharp wakeup call as to how powerful the chinese grip on the battery minerals sector really is. They simply do not want to be beholden to paying those prices and are proactively doing something about it wherever they can - net result being they have brought on supply all over the place very quickly and will continue to do so to meet or exceed their demand for it.
Seems like the prices have rebounded sharply in the past couple of days so hopefully we have found the bottom again and it is still at a point where low cost aussie producers can make a decent buck.
If we look at P1000 production at sales prices north of $1500/t and cost of production around $1000/t that is EBITDA around the $500m mark as a floor (hopefully), and at current share price running at a forward EV/EBITDA ratio of around 16, for an $11b MC with $3b cash in the bank. Not exactly a low multiple for a mining co.
At spod prices around the $3k mark that jumps to $2bn EBITDA and and EV/EBITDA ratio of around 8, which would justify the share price trading sideways in the $3.50-4 region for a while, and possibly a long while unless something else in the growth pipeline materialises from the $3bn cash warchest.
A great stock for the super and hopefully a long term solid dividend payer, but folks 18months ago were getting very carried away with projections based on peak BMX pricing thinking no one else was ever going to bring on supply to meet the market.
Will we see a spod price squeeze again in the future - highly likely, but China is hard at work securing new supply anywhere and everywhere they can - particularly in Africa, and they will do their best to avoid a recurrence of 2022 pricing and as this year has shown they usually succeed.

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I don’t think the majority of punters thought prices would stay in the $5k US range for contracted supply. Most here have been more realistic.

Do I believe LT forecasts of $1500 are correct. No I don’t. Am I in the $4000 range. No.

It will take time to find where the sweat spot is. There will be more volatility as one sizeable resource coming to market, or not, has a huge impact on pricing.

I’ll say this. IMO, $1500 US won’t incentivize enough new supply to meet demand.

PLS Price at posting: $3.71 Sentiment: None Disclosure: Held
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Last $2.95		Change 0.060(2.08%)		Mkt cap ! $8.883B

Open	High	Low	Value	Volume
$2.91	$2.95	$2.80	$37.16M	12.90M

Buyers (Bids)

No.	Vol.	Price($)
2	145182	$2.93

Sellers (Offers)

Price($)	Vol.	No.
$2.95	119681	14

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No.	Vol.	Price($)
2	145182	2.930
2	41400	2.920
1	34364	2.910
1	76734	2.890
2	82234	2.880

Price($)	Vol.	No.
2.950	114681	13
2.960	120206	9
2.970	56928	11
2.980	164132	15
2.990	102511	15

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PLS chart, page-20056

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