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clock Created with Sketch. 23/04/19
13:28
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Originally posted by yanlin:
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Here's MacBanks take on the GXY results...... This is why we are not going anywhere too soon. Event Impact Mt Cattlin strong on costs, recovery soft : GXY produced 42kt of spodumene concentrate, in line with our estimate, while C1 costs of US$453/t were a 17% beat. Recoveries were weak at 51% against our 55% expectation offset by 8% stronger grades. GXY had been targeting recoveries of >70% post commissioning of the Yield Optimisation Project (YOP) which should materially improve recoveries. It was noted on the call that GXY intends to prioritise product grade conceding the >70% recovery target could be at risk.We are less confident for Sal de Vida : GXY will develop Sal de Vida itself after ending the search for a strategic partner with no deal being done. We see Sal de Vida as increasingly uncertain given recent muted pricing and generally longer development times for brine resources. We lift our WACC for Sal de Vida from 10% to 14% which reduces our valuation from A$395m to ~A$90m.Earnings and target price revision Price catalyst 12-month price target: A$1.50 based on a Sum-of-the-parts NPV methodology. Action and recommendation Downgrade to Underperform from Neutral . While production was in line and costs were better at Mt Cattlin, weak recoveries remain a concern given the Yield Optimisation Project (YOP) coming online. The YOP was designed to lift recoveries to >70%, however, GXY noted this could be optimistic given the priority is shifting to better concentrate grades. Sal de Vida is increasingly uncertain, with the search for a development partner ending with no result. While GXY intends to advance the project by itself, we believe funding could be difficult to source during the muted market conditions that currently prevail.
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When your analysis spits out this kind of garbage, it's time to evaluate your methodology. Forget the cash and LPD shares, forget the assets, forget the Mt C income stream...
