Updating the model based on the earnings call this week....

Updating the model based on the earnings call this week.
Highlighting reasons why POSCO wanted to speed up their signing of the definitive contracts via an earlier board meeting and hence executed the contracts with haste.
For those interested in fundamentals like Matt Bohlsen's article see link below:
https://seekingalpha.com/article/41...project-de-risked-huge-cash-sale-posco?page=5

The below are my own quick calculations with some changes due to assumptions on project equity sale
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Just doing a comparison between SDV's current and future value using numbers provided in the announcements, for people interested in the fundamentals
Current valuation for SDV on a per share basis:
*POSCO paid USD280m for 1.58Mt of LCE resource (Measured and Indicated), so the total M&I of 5.67Mt LCE before the sale of Northern tenements gives a total price of USD1005m
Which is circa AUD3.23 per share today.

Future valuation for SDV at 25kpta LCE production gives circa AUD9.10 per share
20% project stake sale assumed as per earnings call as management decided to reach final investment decision by December, i.e. not waiting for an additional year of Mt Cattlin cash flow. We will see how that pans out eventually, given cost of capital needs to be optimised to see what option generates highest shareholder returns.
20% sale on an NPV value of USD1.48bn** for the total project to a partner would arrive at a consideration of USD 296mio (A$410mio at AUDUSD 0.72).
That would be more than enough to fund the remaining capex for SDV (USD474mio required with USD350mio on hand as of today on a pro forma basis)

Calculating it again using a more conservative total price of USD1005m (derived from POSCO sale above), 20% stake sale on the remaining M&I (worth USD725mio) would give a consideration of USD145mio which again more than covers the remaining balance required for a full build out of SDV.

The only difference being how much cash would be left over after FID to return to shareholders or for use to fast track James Bay

	Column 1	Column 2
1	SDV at 25ktpa
2	EV/EBITDA	13
3	EBITDA USD (m)	270**
4	Attributable to GXY (80%)	216
5	EBITDA AUD (m)	288.00
6	Enterprise Value AUD (m)	3744.00
7	Target Market Cap AUD (m)	3824.00
8	Target Price per share attributable to SDV	9.10

*See company announcements for POSCO transaction execution on 28th Aug 2018
**and updated DFS released 15th May 2018


SDV is the lowest operating cost asset in the world, i.e. will always take market share from ALB, SQM, Greenbushes, Qinghai brine, LAC, ORE or anyone else in the world if management chooses to do so. (see Canaccord chart below)

As usual please do not take any of the above as any form of advice. But one can see that there is some nice growth in valuation for SDV over the next few years based on these simple calculations. Mt Cattlin and James Bay were left out of the calculations.

Cheers
Tuna