nice graphs butcher boy. personally, i think guidance will be for higher production than last year which means gross ebitda will be = tonnage output x (price per tonne - cash costs per tonne).
so factors to consider in valuations/ earning predictions:
1) output vol: i predict increasing tonnes for entire fy 17-18 e.g. 14,000-15,000 cf 12,000 last fy but exact figures will be available soon
2) price per tonne: clearly increasing sharply, averaging >10,700/t in USD, likely >11,000 over fy 17
3) exchange rate: has been unfavourable at almost 80 for most of q2 2017 but is starting to soften, 78c now
4) gross cash costs per tonne: have been impacted by lower output and costs of remediating brine chemistry, but now guidance is for progressively lower costs in fy17-18 and beyond, I estimate 3,500
5) gross margins: were maintained at 60% even during pond imbalance periods, will improve in fy18 to around 65-70%.
This gives around USD 105mill gross earnings for olroz in 2018 or AUD 135mill at 78c exchange rate. ore has around 65% stake in olaroz, i.e. AUD 90 mill.
in addition to the gross profit factors above, we can then consider:
6) net debt is 129 mill debt - 65 mill cash & financial assets = 65 mill net debt
7) cash at bank is 52 million
8) cash flow is positive at 20mill/ quarter with another 20mill more VAT refunds entitlement
9) phase 2 expansion looks like it won't require any equity raising, and will double output to 35,000 tpa. the estimated cost of the expansion has decreased from 190 to 160 mill (including 25mill for unexpected costs); the JV partners such as toyota could easily share the funding, plus ORE has established access to debt facilities that it can easily draw down from e.g. mitsuho bank.
10) the liOH plant is progressing nicely and although i believe their timeline is overly optimistic to start construction by nov 2017 and commissioning by nov 2018, they are at least setting themselves ambitious goals and deadlines to work towards, so even if it takes another 6months or more to reach commissioning they are on the right track. this will add massive value.
11) the AAL 35% stake has potential to be re-rated in future as drilling progresses. this stake is worth around AUD 10mill in terms of MC but has future potential.
All in all, I see a good year ahead for ORE. of course we could have further hiccups and hurdles in reaching ambitious goals of nameplate, phase 2 expansion and lithium hydroxide plant, but progress in all 3 is being made and each of these 3 factors will result in a re-rating and de-risking, in addition to the bull-price trends and tight supply in the macro lithium market.
just a matter of being patient to optimise one's entry price before guidance in next couple of weeks. looks like it may hold up at 3.00 after all if its a good week for lithium stocks and markets in general.
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