WR1 re-rate & per-unit valuationsThe PMET comparison is...

WR1 re-rate & per-unit valuations

The PMET comparison is interesting. I think we’ve already seen some rotation from PMET into WR1. This should continue imo as the market digests the relatively appealing risk-reward and catalyst pipeline following the Renard option, and as mgmt complete DD and further details emerge.

It seems there is now also an anticipated deal with a converter, which could even happen when CE & Simon go to Japan & Korea (i.e. next few weeks) but if not, CE seems to suggest a strategic would be brought on when funds are needed next, which he guides us to expect before the end of Q1 2025.

Let’s first have a look at WR1’s valuation.

• 1.26 SP @ 191m SOI = 240m MC
• Less 46m cash (31 Mar)
• Less 12m PWM.V 19.6% ownership
• = 183m EV

For this you get:

• Adina 58mt @ 1.12%, imminent MRE upgrade, anticipating 75mt @ 1.2%
• Reynard 2.6mtpa DMS plant + facilities (cost 58m AUD over 2.5-3 years)
• (cost to make useful, say 50-100m for plant + 20-40m for road share)
• potentially 400m+ CAD tax credits
• Logistics base on TT Highway
• Cancet ~3mt shallow high-grade blob
• Tilly
• Sirmac-Clappier
• Offtake rights for PWM.V Case Lake (lithium, caesium, tantalum)

If we value everything EXCEPT Adina at just 25m, it would be worth 183-25 = 158m

• Adina 58.5mt @ 1.12% = 655,200 t Li2O, i.e. 241 aud /t Li2O

However there is an imminent resource upgrade which will be the basis of WR1's PEA, let’s say:

• Adina 75mt @ 1.2% = 900,000 t Li2O, i.e. 175 aud /t Li2O

This is well below peer valuations, and now that there is a viable path to production in 2026 or 2027, I expect there is much further go to in the re-rate, even without considering the value of Renard as an asset.

PMET.V is difficult to value on a per-unit basis because of its scale and huge prospectivity, but they are now likely some years behind WR1 getting into production. Just on the basis of their declared resource, and taking 119m AUD cash into consideration, their per-unit valuation is 665 aud /t Li2O.

Another useful comparison is LRS, whose PEA resource sits at 63.5mt @ 1.3% (i.e. Colina, not including Fog’s Block). They anticipate 253m USD capex = 388m AUD, and production in 2026. For this 63.5mt @ 1.3%, deducting say 40m cash, and 20m for other assets, LRS Colina has a market value of 500m AUD, which equates to a per-unit valuation of 606 aud /t Li2O.

Elsewhere we even see PWM.V still seems to have a higher per-unit valuation than WR1. Although no MRE yet, they might be able to release one soon, I think generously 10mt @ 1.3% = 130,000 t Li2O. Less 8m AUD cash = 44m EV = 341 aud /t Li2O.

What would WR1 be valued at, if it narrowed the gap with these peers?

• 300 aud /t Li2O, for current MRE = 197m for Adina + 25m other assets + 58m liquid = 279m MC = 1.46 SP
• 400 aud /t Li2O, for current MRE = 345m MC = 1.80 SP
• 500 aud /t Li2O, for current MRE = 410m MC = 2.15 SP
• 600 aud /t Li2O, for current MRE = 476m MC = 2.50 SP

• 300 aud /t Li2O, for anticipated upgrade = 270m for Adina + 25m other assets + 58m liquid = 353m MC = 1.85 MC
• 400 aud /t Li2O, for anticipated upgrade = 443m MC = 2.32 SP
• 500 aud /t Li2O, for anticipated upgrade = 533m MC = 2.79 SP
• 600 aud /t Li2O, for anticipated upgrade = 623m MC = 3.26 SP

Thoughts?

Anybody care to talk more about PMET and LRS, pros and cons as they compare to WR1?