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13/09/21

18:26

Post #: 56029620
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Originally posted by Freehold: ↑
Interestingly LTR has risen +20% today on no news and now has a Mcap of approx $2.6b. Further to this they have prev announced that they will spin off ALL their Non Lithium Assets into a new company called Minerals 260.

This non lithium LTR interests has always been mudding the waters around valuation of LTR. But now we get a inkling of whats its worth. And the directors are implying it ain't worth much . The company is attempting to raise only $15-$30m for these non lithium assets to be spun off.

So why does this matter.? Well If you take the current Mcap of LTR and Subtract of $30m then you get what the market thinks its lithium is worth. And by this number we can compare with AVZ. So LTR MCap of $2.6B less 30 mill gives us around 2.57B worth of Lithium Value.

AVZ at time of writing is a tiny $820m by comparison

So "assuming" the current market valuation of LTR is fair then how does it compare to AVZ well...
1. They have much less resource defined than AVZ,
2. LTR Resource is at a substantially lower overall grade.
3. They are yet to define a DFS so in terms of certainty no where near AVZ
4. They have significantly higher mining cost overhead with very high strip ratio costs and potentially higher labour costs
5. It is unlikely they will be Carbon neutral anytime soon, for AVZ is planned to be neutral via Hydro in a couple of years.
4. LTR are located in in Tier 1 country AVZ is not
5. LTR are closed to port and China than AVZ Although AVZ close to to European demand
6. LTR have World Class MGMT
7. They will have higher taxes to pay than AVZ due to AVZ concessional SEZ
8. AVZ have Offtakes for most or product already
9. Exploration upside for AVZ is simply massive and @ surface. Conversely LTR will have to drill deeper on a already deep resource
10. AVZ has a Very large and valuable Tin byproduct. LTR has a less valuable Tantalum By product from memory

Have I missed anything significant ?

So key things considered I would think that the LTR High strip ratio and lower grade will contra's out any high AVZ Transport cost and shipping costs.

The fact that LTR are yet to define a DFS adds a degree of uncertainty that AVZ has, also AVZ on cusp of releasing the Bankable FS and Finance.

Sov Risk is generally factored at a 10% discount to Low Sov Risk outfits.

So I'm thinking AVZ and LTR are at least equal on mining and transport costs . AVZ has more Sov Risk but much lower taxes. AVZ are further along the certainty ladder.

As we know certainty = value.

So lets be generous and conclude for now that LTR and AVZ should have similar valuations (Personally I think AVZ will surpass LTR with time)

This means that AVZ is significantly undervalued and should be, by all rights, 3x its current MCap @ or near on 75c SP.

Either that or LTR is way overvalued.
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So am I right in thinking that 10% discount brings us back to 67 cents mmm whats the other difference between the two. number 6. Or am I missing something.

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AVZ Price at posting: 25.5¢ Sentiment: Hold Disclosure: Held
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0 Great analysis

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