Below are some comments on yesterday's deal from Bell Potter. The final paragraph has their implied valuation of SDV based on the deal multiples.
Galaxy soared after they signed a non-binding pact to sell tenements in the northern basin of Salar del Hombre Muerto Argentina to POSCO for US$280m (A$370m).
Galaxy retains ownership of tenements in southern basin and will use funds from the sale to keep developing the Sal de Vida project which contains an
estimated4.09mt lithium carbonate equivalent of JORC compliant resource
The tenements represents ~28% (1.58Mt LCE) of the total JORC M&I resources of entire SDV project at 5.67Mt LCE.
The current transaction multiples from POSCO deal implies an exit valuation of ~US$1b or A$3.3/share for the SDV project on 100% basis vs base case valuation of U$590m or A$1.9/share.Our SDV valuation is based on just 1.14mt of reserves in southern tenements so there is no impact to our base case valuation from the deal.
