Its interesting looking at one of the latest broker valuations for FFX.
View attachment 3549710They value it at
81 cents but only
17cents of that is the Lithium and I would argue that the lithium is now worth considerably more than that.
The $176M is based on the US$130M likely payment from Ganfeng for 50% of Leo Lithium which was proposed back in June.
Since then the lithium spot price and the valuation of lithium companies has increased significantly and if you compare the valuation of other companies such as PLS and AVZ the valuation looks way too low.
PLS is producing so deserves a higher valuation and has less sovereign risk but resource grade is lower
1.23%, tonnage is higher
268mt and production capacity higher
580ktpa. MC $6.6BAVZ is not as far developed as FFX and still doesn't have the funding in place to develop the mine and I would argue has a much higher sovereign risk but resource grade is higher
1.65%, tonnage is higher
401mt and production capacity is higher
700ktpa. It also will have higher transport costs and I would argue the management is nowhere near as good as FFX.
MC $850MFFX just about has the funding in place and is close to developing the mine, it has higher grades than PLS
1.45% but a lower tonnage
109ktpa and slightly lower production capacity
436mtpa.
So based on the valuations of PLS and AVZ you would think that the FFX/shareholder share should currently be worth anywhere between $300M - $1B and that should increase when production starts.
If you assume the FFX/shareholder share of Leo Lithium is currently worth
$500M that would work out to be 55 cents a share which would increase the broker valuation from
81 cents to $1.19On top of this there is nothing built in for future gold exploration success so that will just be icing on the cake.
So in summary FFX still looks very under valued.
