Running Commentary on the SP Movements., page-15235

So JP Morgan’s scary note is just another incorrect analysts prediction of the supply and demand dynamics that Will not reach equilibrium for at least 5yrs if not longer...

The PLS announcement today of Posco placement at $0.97 of $80m for a 4.75% stake in exchange for security of lithium supply at market prices in the future only proves security of future supppy is key for battery manufacturers as they know it won’t be a liquid enough market to rely on freely avaliable supply.

I originally was excited about lithium 7yrs ago when I realised a mobile phone consumed circa 20grams of lithium carbonate and with the push to electric vehicles a hybrid car would need circa 10kg of lithium carbonate, and a full electric vehicle would need 20kg. So that’s 500 and 1000 times more lithium respectively than a mobile phone.

The next phase is where is all the baseload power to come from when we have millions of these new electric cars displacing thier need for petrol with electricity?

Well, that’s where large batteries come in where they store, over night, the excess capacity of baseload power stations wasted electricty, and discharge it to the grid the next day! You may ask What does one of those on average consume in lithium carbonate? Well, circa 1000kg - or 50000 times the amount a mobile phone uses!!

So putting the macro theme scares to rest now, here is a quick and rough and ready market cap comparison:

So based on PLS:ASX valuation of $1.9bn for 80mt (including a bit of debt too)- if AVZ can JORC up 300mt which I believe they can by July ( they probably have a multiple of that anyway if fully drilled) then AVZ 300mt is 3.75 x size of PLS = $ 1.9bn x 3.75 = $7.125bn ( the indicative valuation of the AVZ asset)

PLS owns 100% of their asset and AVZ own 60% of its asset so therefore = $7.125 bn x 0.6 = $4.275bn Val for AVZ.

Then factor in say a generous 50% risk discount for DRC (even though 66% of world cobolt is produced there not to mention vast amounts of Cooper for decades etc).

= $4.275bn/2 = $ 2.13bn market cap for AVZ

AVZ has fully dilluted circa 2.350 bn shares

Therefore $2.13 bn / 2.350 bn shares. =

SHARE PRICE of

$0.90 (or 3.6 times the current share price) in 4-5months and plenty of upside as the resource is bigger but 300mt may be a mine for 40yrs plus anyway so no one needs to drill more..)

(Incl. a 50% risk discount for the Congo and not including the circa 6km of extra strike).