Hi GCar,
It's entirely possible that I'm being far too pessimistic, but is seems that some analysts share a similar sentiment.
Obviously it will all come down to the long term price of lithium carbonate. We can all make our own predictions about where long term pricing will land, but I think most predictions (including mine) are pretty worthless considering none of us expected the current pricing situation. I'd say that 10% CAPEX/OPEX reductions at SDV are a fair assessment; however, potash credits will no longer form part of our revenue so I assume this probably negates the savings in CAPEX/OPEX.
With regard to pricing and NPV, the last updated DFS only considered financial sensitivity at a +/- 25% range. Clearly current pricing wasn't even considered as a possibility at the time. A NPV of US$854m at a 25% discount (~$10,500t) suggests a base case NPV of US$400-500m at current pricing (50% discount, under US$7000t). This seems to be pretty much in line with the +24 month estimate from Bell Potter (see table above). What this means long term is anyone's guess. Some have a return to pricing of US$12-13k per tonne by 2025. I really hope they're right as that kind of long term pricing would justify a NPV in excess of US$1b.
I hope that my estimate ($1b reduction in NPV) is wrong, but I certainly consider it possible.To be honest that's probably a low estimate and a more realistic assessment may be somewhere from US$500-900m. I guess we'll just have to wait and see. In November last year they advised that the "refreshed" DFS would be released in approximately six months, meaning it would have been imminent around now. IIRC, Simon Hay has now stated in the last conference call that the DFS will be completed "late this year", so it seems like timings have taken a slide right yet again, which is disappointing but not unexpected with everything going on right now.
