Hi all, Please see AVZ current snapshot vs major Lithium peers...

Hi all,

Please see AVZ current snapshot vs major Lithium peers PLS & LAC, as well as nine hard rock development peers (note: most are hidden on the table below due to space constraints) used to determine the current Lithium hard rock development peer EV average, currently at US$994/t Li20





A few accompanying notes to the above:

1. Development peer average (resource EV/t)  - averaged across 9 x Hard Rock Lithium developers.
Note: PLS (a producer) and Lithium Americas (LAC - Brine & Clay) are both shown but are excluded from this average calculation for obvious reasons.

2. AVZ's cash balance estimate includes the company estimate for Sept. quarter expenses, final payments to Dathomir (US$20m in total deducted) and approx. broker/ lead bookrunner fees for last month's $40m CR. I've also added in the full conversion of AVZOs at 6c expiring April 2022, as some of the remaining A$4.76m cash equivalent has already been converted last month and also this month - with the remainder now a foregone conclusion IMHO. Also nice to see a $775k R&D Tax rebate covering AVZ's admin costs for the recent June quarter.

Thus, I don't expect any general working capital concerns for the next 12-15 months, and this paves the way for accretive deals ONLY from here on in, particularly given;

a) the DRC government's reiterated support for AVZ and the Manono project

b) the whole sector going gangbusters with growing calls from the likes of Bank Of America, Morgan Stanley, Macquarie, JP Morgan etc. to 'Buy Everything!' & 'Buckle Up' for the ride of a lifetime.

c) growing and perpetual Lithium deficits (particularly Hydroxide) a fact of life until at least the end of this decade

'.....supply will struggle to keep up, and the analysts said they would see a deficit beyond 2030.
“This means unknown, and lower economic returning projects will be required to fill the supply-demand gap,” the analysts said.'
Click on the below to read the AFR article (source)



Furthermore, you can forget 3TWh ( @Scarpa et al), we're now looking at a minimum 4TWh capacity by 2025, and 7-9TWh by 2030 IMHO.  And yes, I've had to increase the 2030 forecast since the tweet below (last month), up from 6-8TWh capacity by 2030. But, as always, all IMHO so please DYOR.



Current, planned (known) & estimated Battery Megafactories (no. and capacity) in the pipeline from 2025 (by 2030)



Lithium Hydroxide Balance to 2030 (source: Benchmark Minerals Intelligence)



I also have the following pinned to my office wall as a reminder.

'ANY BATTERY RAW MATERIALS ANALYST WHO ARGUES THAT LITHIUM PRICES WILL LIKELY PEAK IN 2023-24 HAS NOT ADEQUATELY FACTORED IN THE IMPACT THAT AN INEVITABLE DECADE LONG TECHNOLOGY DISRUPTION (REFER TO THE BELOW CURRENT GLOBAL EV S-CURVE TRAJECTORY AVERAGE) CAN HAVE ON A RELATIVELY TINY COMMODITY MARKET ON WHICH THIS DISRUPTION RELIES.

LITHIUM IS STILL A RELATIVELY NICHE MARKET AND YET THE ONLY IRREPLACEABLE ELEMENT IN THIS 'CLEAN DISRUPTION' OF TRANSPORTATION & ENERGY STORAGE USING LITHIUM BATTERIES.

LITHIUM RAW MATERIALS & CHEMICALS WILL CONTINUE TO COMMAND HIGHER PRICES TO INCENTIVISE EXPONENTIAL SUPPLY GROWTH, THAT IS, UNTIL SUPPLY FINALLY CATCHES UP WITH TAPERING DEMAND GROWTH - NOT EXPECTED TO OCCUR UNTIL THE END OF THE DECADE.

THE DIFFERENCE BETWEEN NOW AND THE 2018 ‘LITHIUM BOOM’ IS THAT THE MASS ADOPTION OF E-MOBILITY (INCLUDING E-CARS, E-BOATS, E-BIKES, E-BUSES, E-TRUCKS & VANS & SOON E-PLANES - EACH REQUIRING LITHIUM) HAS FINALLY ARRIVED, AND IS GREAT NEWS FOR REDUCING GHG AND IMPROVING AIR QUALITY.’ @Lithiumanalysis July 2021

Technology disruption event >> early mass adoption phase >> s-curve 'escape velocity'.
Current trajectory (average) for worldwide electric car sales as a percentage of total new car sales. Note the acceleration from 2021-2028 in particular.



3. The fifth column in the peer comparison table (above top) highlights AVZ's SP potential in the short term i.e. ~91.5 cents per share to match LTR's current reserves Enterprise Value per tonne of Li20. So the $1 AVZ party proposed at the beginning of the year (refer to bottom of post 49963859 ) is looking more and more achievable IMHO.

Note: Some will argue that LTR also have a Nickel/Gold/Copper project and therefore the company should have a higher value than AVZ.
However, I would argue that Manono's 130,000 tonnes of Tin reserves and counting - among (if not) THE largest Tin reserves for any project on the planet when all said and done) - more than counter balances;

a) AVZ's country/project risk discount (note: AVZ currently trading at a staggering 88.3% discount on a resource EV/t Li20 basis vs hard rock development peers, as opposed to a standard 10-15% - refer to the table below)



and;

b) the estimated value of LTR's Ni/Au/Cu project with nil reserves currently.

4. Pilbara Minerals SP Market Cap has risen from $A5.95b to A$7.22b (fully diluted) since 5th August = A$1.27 billion appreciation in 6 calendar days, or ~1.5 x  AVZ's ENTIRE M/CAP (A$807m fully diluted).

It's also interesting to see that PLS' reserves are valued at ~US$3,100/t Li20, while AVZ's Lithium ONLY reserves (i.e. excluding the value of 130kt of Tin reserves) is valued at a crazy US$362/t, and again a whopping 88.4% discount on an EV/t Li20 basis.

However, if Manono were a Tin only project, then AVZ's 75% share of 130.3kt Tin reserves (total to date) equates to an Enterprise Value of US$5962/t Sn, against a current spot price of US$36,395/t.

So, combine the value of both Manono's current Lithium & Tin reserves (AVZ = 75% of Roche Dure) and as I've said all along, the growth potential for AVZ (once it executes a clear path to production) is absolutely mind boggling, and especially now even more so than ever before IMO.



PRESENTS









GLTA, all IMHO and not financial advice of any kind. Please DYOR

Cheers
Elpha

p.s. @qball, please add the below classic to the mix tape.
This track was the inspiration behind creating the above 1 year weekly breakout charts for Tin, LCE & AVZ.