Why I didn't buy LLL but did buy more FFX

As the title suggests I was in quite a bit of turmoil the last 2 weeks when deciding if I should take up my LLL entitlement. However I went back to the numbers and this is what I arrived to.

FFX holds enough cash to get to cashflow positive on its gold. This means it is reasonably safe to perform a NPV calculation on its gold asset. Sprott did this and came to US$632m at todays exchange rate this is $0.74/share, For the purposes of this analysis I will give it the africa discount of 80% (The same as many ASX listed gold producers in Africa) to make it an even $0.60 per share.
https://firefinchltd.com/wp-content/uploads/SprottEquityResearchReportUpdatedGoulaminaDFS06Dec21.pdf


So then the question became do I buy LLL shares at $0.70 each or buy FFX shares to get exposure to them. Now I personally am very bullish on LLL and think when benchmarked to peers it will easily go to $2Bn + market cap and be one of the hottest IPO's of this year. However this is about me choosing to buy FFX over LLL.

When you buy a FFX share what do you get? You get =1/1.4 of a LLL share (at LLL listing price worth $0.7/1.4 = $0.5/share), you get 20% of the LLL market cap at listing ($780,000,000 market cap = $156,000,000 or $0.131/share and I value using a NPV methodology the gold at $0.6/share

	FFX 20% LLL Holding	FFX LLL Distribution	Implied LLL MC	Implied LLL SP	FFX Gold	FFX Lithium	FFX Current
1	$0.047	$0.180	$280,000,000	$0.251	$0.60	$0.227	$0.83
2	$0.064	$0.244	$380,000,000	$0.341	$0.60	$0.307	$0.91
3	$0.081	$0.308	$480,000,000	$0.431	$0.60	$0.388	$0.99
4	$0.097	$0.372	$580,000,000	$0.521	$0.60	$0.469	$1.07
5	$0.114	$0.436	$680,000,000	$0.610	$0.60	$0.550	$1.15
6	$0.131	$0.500	$780,000,000	$0.700	$0.60	$0.631	$1.23
7	$0.148	$0.564	$880,000,000	$0.790	$0.60	$0.712	$1.31
8	$0.164	$0.628	$980,000,000	$0.880	$0.60	$0.793	$1.39
9	$0.181	$0.692	$1,080,000,000	$0.969	$0.60	$0.874	$1.47
10	$0.198	$0.757	$1,180,000,000	$1.059	$0.60	$0.955	$1.55
11	$0.215	$0.821	$1,280,000,000	$1.149	$0.60	$1.035	$1.64
12	$0.231	$0.885	$1,380,000,000	$1.239	$0.60	$1.116	$1.72
13	$0.248	$0.949	$1,480,000,000	$1.329	$0.60	$1.197	$1.80
14	$0.265	$1.013	$1,580,000,000	$1.418	$0.60	$1.278	$1.88
15	$0.282	$1.077	$1,680,000,000	$1.508	$0.60	$1.359	$1.96
16	$0.299	$1.141	$1,780,000,000	$1.598	$0.60	$1.440	$2.04
17	$0.315	$1.205	$1,880,000,000	$1.688	$0.60	$1.521	$2.12
18	$0.332	$1.270	$1,980,000,000	$1.777	$0.60	$1.602	$2.20
19	$0.349	$1.334	$2,080,000,000	$1.867	$0.60	$1.683	$2.28

The decision became quite easy, when FFX was trading at $0.83/share it was like buying LLL for for $0.251/share. Even buying FFX today you are effectively buying LLL for $0.52/share. I think those that missed out on the over subscription will soon scamble for FFX shares over the next few days.

Buying FFX currently presents a great opportunity in my opinion. The market so often gets things wrong. As an example look at the recent TAH and TLC split, a company valued at over $12Bn with what you would assume to be plenty of "sophisticated investors", the first day of trading for both an almost $1Bn extra value was created. I think buying now and holding unti the record date is such an easy trade.

All the best, I think we are in for a wild week as the fomo creeps in.

Happy to be corrected should any of my calculations be wrong. Do your own research,