Hi
@Big Johnny &
@GCar you're both right.
LCE = Lithium Carbonate Equivalent.
The conversion for Mt Cattlin concentrate (spodumene) is around 8:1
Now correct me if I have misunderstood the Orocobre presentation, but they point out on page 3 that their production rate for 2017FY was 11,862 with sales of 12,296
Also, their business model with their partners allows for 66% ownership of that production bringing their value to 7,829 tonnes.
If it takes 8 tonnes of concentrate to produce 1 tonne of carbonate then Galaxy would need to produce 62,632 tonnes. To say that they have produced the equivalent to Orocobre by LCE value.
Orocobre advise their margin per tonne is $6,053
To meet that equivalent margin we then need to work out how many tonnes Galaxy needs to produce of concentrate being sold at $860 whilst the cost to produce is around $390
$860-$390=$470
$6053/$470=13 tonnes
So, that works out that Galaxy needs to produce 13 tonnes to meet the same profitability of Orocobres 1 tonne.
If Orocobre's ownership of LCE under their partnership is 7829 tonnes and to meet profitability Galaxy requires production of 13 tonnes per tonne then that's 102,000 tonnes of concentrate.
We know that Galaxy has a contract 2017 for 160,000 tonnes which exceeds that requirement.
Plus, from what I understand the company is achieving up around 200,000 tonnes per annum now from Mt Cattlin which is around 25,000 TPA LCE. So effectively doubling their margin revenue but also placing Orocobre's production of LCE at 31% by comparison to that of Galaxy.
Galaxy’s shortfall is that they don't own a processor, nor do they toll via one at this time which would adjust the equation also.
Plus Galaxy is working to increase production whilst also reducing operating costs.
There is further leverage in Galaxy's favour by way of debt outstanding against each asset.
Would love feedback, especially on that of what Orocobre own by way of their production.
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Hi
@Thesi
Firstly thanks for your in depth reply.
Secondly, I'm not doubting your figures at all.
Only the term "producing". I know, I'm being pedantic.
Another stock which I'm in, AGY, is stating that they will be only the 2nd ASX listed stock "producing" LCE, which is an important distinction. The product they will produce is ready to go, no further refinement.
The product they will be producing by March 2018, is Battery Grade, ie 99.5% LCE.
ORE is only producing Industrial Grade atm, which is lesser quality.
I'm heavily invested in both AGY and GXY, so I want both to shoot the lights out, but I think it's important to highlight the products " produced" by both Co's.
It's been said that hard rock CO's are miners, Brines are Chemical Engineers, I think this is correct.
Hopefully Sal Da Vida is a go for GXY, as it's fantastic to see we have a foot in both the Brine and Rock camps.
I've only been invested in both these CO's for 12 mths, and am learning the nuances of LI mining by the day.
I know cross promotion is frowned upon, but for those interested in Brine the AGY threads are very informative.
Go both!!!!
Cheers
BJ