Assuming the Morgan analyst was using a US$2500/t average LCE price over LOM, his $24/t rule of thumb to value early stage Lithium explorers would be essentially 1% of that price. That was two years back when LCE price was US$6000/t.
Now, with spot at US$20,000/t.....if you use US$10000/t as average LCE price over the LOM, it probably wouldn't be unreasonable. 1% of that is US$100/t. Let's use that as the rule of thumb now.
Manono-Kitolo 1bn+ ton resource equates to 31mt of LCE (=1000 * 1.25 * 2.47). At US$ 100/t, you'd value Manono-Kitolo at US$3.1 bn at its early explorer stage vs. Market cap at 22.5c of US$644m (for 100%).
Even if you derisk this fair value calculation by 50% to US$1.5 Bn in order to be conservative, you still get ~2.5 bags from here (or 50-60c/share for AVZ). Mind you here we are being conservative TWICE - 1) in assuming half the current spot price as LOM average and 2) then halving our fair value est again.
Whether we use CF/NPV analysis or rules of thumb, we still get enormous upside.
https://hotcopper.com.au/threads/ru...he-sp-movements.3704088/page-23#post-28132929
This is an asset that cannot be easily replaced. The size is probably larger than its peers put together while grades are comparable/better --- you don't find these more than once or twice in a hundred years.
Potential Takeover Offer Price, page-212
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