What’s PLS worth?
As per my post on the daily SP chatter string, I’ve started a new string for valuation/analysis/critique. Hopefully this string can be more dedicated to fundamental analysis of PLS rather than wild speculation.
IMO there’s a lot I like PLS … it’s a true Tier 1 asset (large asset, projected to be at sharp end for cost), leveraged to growth of EV and I also like the relationship/options with Posco. However, being in commissioning/construction mode and producing a new mineral with volatile pricing – it’s at the high end of the risk spectrum and SP volitivity. So, what’s it worth today?
Market Analysts:
- ThompsonReuters consensus 12 month SP target is $1.02 across 7 analysts.
- High$1.20 (unchanged since Aug18); Low $0.70.
- 5 of the 7 analysts have downgraded the SP target since start Apr19
Bringing those 12 month targets back to SP as of today, the analysts have an averagevalue of ~90c.
I prefer to try to understand the range of values based on key risks. IMO the biggest of these are:
- SP6 price received
- SP6 yield (driving both costs/dmt and production tonnes)
- Time frame for existing/new production to achieve design performance
Potential CAPEX blowouts and other OPEX are minor risks IMO (ie. I think these can be well managed by KB and his team). On the upside, Posco JV and Stage 3 could add value, but as I said on the other string, there are too few details to estimate value IMO. If others have methods of valuing these (as opposed to just speculating what they’re worth) – perhaps they can add them to the string.
I’ve therefore created a matrix of values based on:
- Operating cost basis uses latest Stage 3 advice (US$290/t at 75% yield). This is much higher than the Stage 1 LOM figure (US$207/t) but PLS have since adjusted down the yield and possibly other components. Therefore, US$290 may be a tad conservative (but Stage 1 Feas too bullish).
- CashOPEX components affected by yield have been scaled (ie. mining &processing) those unaffected left as per Stage 3 advice (eg. Royalties, nativetitle)
- Simple 10x Net Operating Cash Flow valuation model at time of performance metric.
- Future performance discounted back to Jun19 at 12%pa.
Results below. I’ve included the Stage 1 only numbers to illustrate the importance of getting to design yield (15-20c worth in SP terms). Seems to me the analysts (on average) are projecting either much lower SP6 prices than PLS is currently achieving and/or a lack of confidence in PLS achieving design yield.
As a reference point, PLS based their Stage 1 Feasibility Study on a long term SP6 price of onlyUS$537/t.
Have others done similar price/yield/value analysis? Thoughts?
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pilbara minerals limited
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What's PLS worth?
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Last
$1.54 |
Change
-0.050(3.14%) |
Mkt cap ! $4.955B |
Open | High | Low | Value | Volume |
$1.60 | $1.60 | $1.52 | $55.49M | 35.93M |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
3 | 34758 | $1.54 |
Sellers (Offers)
Price($) | Vol. | No. |
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$1.54 | 49026 | 3 |
View Market Depth
No. | Vol. | Price($) |
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3 | 34758 | 1.535 |
11 | 164961 | 1.530 |
17 | 249301 | 1.525 |
52 | 643646 | 1.520 |
11 | 182888 | 1.515 |
Price($) | Vol. | No. |
---|---|---|
1.540 | 49026 | 3 |
1.545 | 132682 | 4 |
1.550 | 267539 | 9 |
1.555 | 70889 | 4 |
1.560 | 165000 | 5 |
Last trade - 16.10pm 02/04/2025 (20 minute delay) ? |
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