Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
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Lol what is there to discuss? Good on News for all his time and effort in writing such long posts and take a bow all those who purport to understand him. Obviously the limitations are all mine and if i can stay awake long enough to get to the end of his posts then maybe they would make more sense even to me.
Meanwhile back in the real world the sell price is still above 20 at 20.26 despite the Bid stating 19.55. Second time today they dropped the Bid needlessly. Fishing for shares maybe or MM's just bored?
Bad day for the global markets so holding up ok so far.
Thanks news very informative..jollifant perhaps you would like to discuss ? Lol
Jollifant:
Quote: "Long winded espistles [Sat: 13:45pm, 19.9.21] & "Any chance of 1 para brief & concise summary of where you think the SP is heading?" [Sat: 11:12, 19 Sep 2021].
Answer:
Yes, Dollaradrop, my few posts are indeed from notes. For the avoidance of doubt, they are in direct answer to all the discussions I have read on the forum eg its not worth digging up.
Very concise but no rationale or links etc to say why? So, I have to provide JORC of both IRR and Core Lithium*s Finnish project, NT, Australia to prove evidence that the Finnish project is headed for production even though the Finnish resource for spodumene is so much lower, hence mine life is 3hrs vs IRR 8 yrs. All my posts were to ANSWER the missed factual info available out there.
As for a request for "1 para brief and concise summary of where you think the SHARE PRICE [sp] is heading? This is my FIRST TIME OF POSTING on this forum fora very long time harking back to the days when N.Mather used to give interviews on IRR in the early days. That was how I came to know about IRR through Mather*s other co listed in London.
So, EVERYONE has had YEARS OF POSTING concise 1 para*s, hence why FACTUAL info was not forthcoming so its was missed info.
These types of 1 para share price [SP] predictions are usually guesses and over-estimated back of envelope types which is not backed by any peer valuation models as done by brokers.
This is the terrain of TRADERS and that is up to them how they view their own portfolio/s.
However, for the more experienced mining investors, they look at the no*s and fundamentals
to see what they hold and industry trends, forecast, prices going forward eg S & P Global etc.
In any examination paper, unfortunately, 1 para concise answers will mean FAIL.
It gives no rationale with precedent case/s etc and therefore the precise answer may be deemed as a guess by the examiner. As one is aware, examination papers end with "Discuss."
Other examinations go to 4 full pages of 1 Question to be answered. Does one not sweat to complete the exam and make sure one has hit ALL the ANSWERS and most points for SCORE MARKS.
Same here too and other stocks. 1 answer in short, concise answer will NOT answer any of the fundamentals. NO BROKER REPORT IS EVER 1 PARA, CONCISE SUMMARY. They go to pages and pages of evidence based/backed summary. Have a look at say RICHARD KNIGHT OF LIBERUM*S BROKER NOTE on an Indonesian London listed copper & gold explorer as an example.
Hope this fully clarifies. Respectfully, News, 20 Sep 2021.
News -
For what it is worth, I thoroughly enjoyed reading your notes and supporting rationale on each point.
You are correct, so many have missed the point and are riding share price margins over intrinsic value.
Amazing how informative and logical notes seems to quiet down the BB nonsense.
Perhaps Jolli will be kind enough to provide a cogent summary derived from your working notes.
I do indeed Mike but i find News' long winded epistles to be inarticulate unclear ramblings presented at random as they pop into his head. Hence my request for something more cogent and brief.
I'm guessing you're a fan of James Joyce?
What's up Jolifant. Does one not like reading good, hard facts about how world class the IRR lithium project in Ghana is?. Never get bored of reading good honest facts, it is the rubbish that appears on here which is tiring. Yawn.
Yawn, you do ramble on!
Any chance of a one paragraph brief and concise summary of where you think the sp is heading?
contd..
Ioneer [ASX, Australia] mkt cap A$1.14bn prior to the JV with Sibayne Stillwater. This is a lithium carbonate/hydroxide potential producer, same as BCN. Vulcan Energy, mkt cap A$1.65bn looking for lithium in Germany. All NOT producers yet.
Pilbara Minerals mkt cap A$6.722 BILLION with Pilbara reporting EBITDA $18.11m in the first sesmeter of 2021.
MACROAXIS-PILBARA
https://www.macroaxis.com/invest/ratio/PLS.AX/EBITDA
"EBITDA...is a measure of a co*s operating cash flow based on data from a co*s income statement and is a VERY GOOD WAY to compare COMPANIES WITHIN INDUSTRIES OR ACROSS DIFFERENCE SECTORS."
"PILBARA EBITDA P E E R COMPARISON - stock peer comparison is ONE OF THE MOST WIDELY USED & ACCEPTED METHODS OF EQUITY ANALYSIS...to DETECT UNDER-VALUED STOCKS with SIMILAR CHARACTERISTICS.
PEER ANALYSIS of Pilbara could also be used in ITS RELATIVE V A L U A T I O N, which is a method of valuing Pilbara by comparing valuation METRICS of SIMILAR co*s."
[As a backup of what I said]
Lastly, relating to BCN, the lithium is CLAY based. The govt of Mexico has asked the co and JV partner how they are going to process the lithium as their Chief Geologist of Mexico has told them that to date, NO CO has been able to produce COMMERICIAL quantities of lithium purely from clay based. Hence, why there is no counter take-over bid by anyone else except Ganfeng. All well known about clay. SP Angel in an interview said that clay in lithium is not liked by refiners as it causes a lot of dust in the baking. SP Angel is talking of impurity in lithium, NOT PURE CLAY based. Hence, why PURITY COMES into play which is said by IRR and it is in the SI Capital Note of July 2021 that IRR*s is high purity, hence SC6. It is not called clay but mica when it is in a lithium mix. BCN*s lithium is IN CLAY but the JV partner has said they can do it and so they are taking on that metallurgy risk. Mentioning this given it is in the public domain and public knowledge and hence why the t/o may not have been as high or higher as some would have liked it vs peers etc. So, this appears or could be an exception than norm but all M & A deal book will show it. Also, BCN did a placing at 45p when the share price was some 67p from recall. So, when the premium came in at 50% region, it was from a 45p base. This is the norm in t/o and hence why low share price could attract bidders etc which is also a known fact and standard text from B.Finance.
So, I end with thanks. Sat, 18 Sep 2021.
contd
then P/E comes into play as this is used for ALL co*s in the FT100, FTSE as basic analysis.
Different sectors have different average P/E*s, the highest being for tech which is valued on higher P/E*s. Standard reasonable P/E would be 10 and in not so good times P/E 8.
So, P/E 5 used is very conservative and on the very low side. This is for co*s that have EBITDA etc [income/earnings].
So, IRR is potentially in that class soon to come, hence EBITDA is given in the scoping study.
One will see that the EBITDA of US$105m per yr [100% of project] over 8 yr mine life = US$52.5 million POST PIEDMONT JV. This is £37m in £ [US$ 52.5m divide by 1.38 given the exchange rate is £1=US$1.38] vs £112m IRR MKT CAP @20.7p.
====£37m EBITDA [post JV] x P/E 5 = £ 1 8 5 MILLION IMPLIED MKT CAP ==
--Translates to 34.19p per IRR share vs LIBERUM BROKER TARGET 32P.
[Difference could be from the exchange rate and some normal variance etc]
====IF US$2,500/t for SC6 [6% spodumene] IRR vs US$650/t in Scoping Study as selling price, that is about 4 TIMES MORE.
So, as said Macquiare is MULTIPLYING potential PLC [Pilbara Minerals] EBITDA to come on US$2,400/t for SC5 vs last a/c*s US$900m+/t , so too one can do the same for IRR. My post
yesterday showed MULTIPLY 34P X 4 TIMES @ P/E 5 = £1 . 3 6 per share vs 32p Liberum BEFORE 4 times.
CORE LITHIUM
One has to look at the broker report if there is one. For this reason, Core bought licences near them as they have to look for more spodumene to also extend MINE LIFE. Obviously, the COST STRUCTURE FOR IRR is a bit more superior than Core [see Toro_AIM on Twitter chart from broker]. I note from the NT govt.au it also says that Finniss [Core] is 2km from a sealed road. IRR*s lithium project from recall is 1km from a sealed road. SP Angel said trucking is cheap, hence the cost structure appears cheaper. This is something known as costs in Australia are much higher in terms of mining staff wages etc.
As I said, for the AVOIDANCE OF DOUBT, Macquaire did the POTENTIAL FORECAST for Pilbara based on US$2,400/t achieved in their auction on 14.9.21 vs US$900+/t from Pilbara*s last accounts. So, the figure of 34p x 4 approximately or 32p x 4 approximately is doing the SAME thing as Macquaire in the AFR[Australian Financial Review] article which came out after 14.9.21.
PLS*s auction price achieved was from their RNS/ANN of 15.9.21 and one can read it from Hotcopper Pilbara Minerals to check.
I have been very quiet but since so much has been missed and so much confusion, I decided to come out to post some of the FACTS which is backed up from links, refs, source, scoping study etc etc.
For that reason, its a no wonder why Piedmont offered such generous terms not seen anywhere by me or others to pay CAPEX FULLY FOR IRR, studies etc to the tune of US$102M WHICH TOGETHER WITH IRR*S CASH OF US$28m UNDERPINS the mkt cap.
In Australia LITHIUM EXPLORERS ETC have HIGH MKT CAPS ie Core A$700m, I
Jlite@16:12, Fri, 17 Sep 2021
Quote: "Whilst it is very hard to compare 2 different countries with 2 different tax & project structures.."
"..either IRR is UNDER-VALUED or the other is OVER-VALUED."
Comment:
It is standard analysis for many analyst/broker reports to use COMPARITIVE PEER GROUP irrespective of their tax structures or different county jurisdiction. For example, Richard Knight of Liberum has produced an extensive broker report on ARS [Indonesia] and in the comparitive peer group, there is a whole list of other co*s that is used for comparison of other copper explorers which include Solgold*s Cascabel [Ecuador].
In relation to IRR and spodumene, one has to look at other SPODUMENE potential coming producers in the same way. I have not used other spodumene potential producers because I am concentrating on the high purity co*s. Toro_AIM on Twitter has produced a chart from the broker and it shows all the lithium explorers to-date and only IRR and Sigma are the LOWEST cost group. Just above is CORE LITHIUM. Someone said this chart is from the broker which will be Liberum?
As for tax & project structures, ALL projects are boiled down to EBITDA etc denominated usually in US$ in the scoping studies etc. So, standard analysis from all brokers do not take tax & project structures weighed individually in components but rather on US$$ COST, CAPEX, OPEX, NPV etc. The ONLY difference that different jurisdictions make will be the DISCOUNT FACTOR which will be already BUILT IN usually at NPV discount etc. For this reason, SI Capital notes that Ghana is a "PRO-MINING JURISDICTION." Vincent Mascolo in a video interview said that the govt at the "highest level" is keen on the lithium project given it will be the 1st from West Africa. It answers this jurisdiction question which is of interest, hence the mention in the said note.
OVER-VALUED OR UNDER-VALUED QUESTION:
Ref: "Finniss project by Resourcing the Territory, NT Gov. au
It is a 2 page factsheet on Finniss [Core Lithium on ASX]:
"Pre-tax nominal IRR of 80% vs IRR
Sale price $981/t [US$687/t] vs IRR US$650/t
NPV $114m
JORC 9.6Mt at 1.3% Li2o vs IRR 14.5Mt at 1.3% Li2o
Revenue $501m over 3 year MINE LIFE vs IRR 8 yrs
Payback <1.5 yrs vs IRR <1yr
HIGH GRADE 5.5% grade lithium concentrate vs IRR 6%
Low start up capital $73 million , 1 of the Australia*s lowest cost intensity lithium mining plays."
Northern Territory [NT] Australia govt does not give Core*s Finniss a EBITDA but one can find it from Core. Just to get an idea of revenue alone is $501m divide by 3 yr mine life [revenue is not EBITDA]. Since the NT govt gives US$ in [ ], it means that the $ quoted appears to be A$.
So, Core*s [CXO] MKT CAP OF A$700M vs NPV $114m = MKT CAP IS 7 TIMES MORE THAN NPV.
BCN was taken over at % of NPV [US%] which I calculated was NOT 100% but some 60% but this is from recall as I have thrown out my notes.
IRR - given there are EBITDA figures ie EARNINGS, then P/E COMES INTO P
Thanks news. I agree that the market cap is fully underpinned by Ewoyaa plus cash. As time moves on, the work to confirm the scoping study will continue and this value gap should slowly decrease. In theory at least.
This was the most interesting bit of your post to me.
"Mkt Cap: A$700m or £370 MILLION [£1=A$1.89] vs IRR MKT Cap £112m.
Core*s Finniss Lithium project: 9.63 Mt @1.31% Li2o vs IRR 14.5Mt @1.3% Li2o
ANNUAL PRODUCTION: IRR 295k tpa vs Core 175k tpa [Source: SI Cap & Core DFS]"
Whilst it is very hard to compare two mines on two different continents with two different tax and project structures. The difference is so huge that it is hard not to conclude that either IRR is under-valued or the other is over-valued. A long / short trade of the two could be very profitable! That would be one way to play it.
Thanks also for the insight on the situation down under. That could prompt a wider search for investments in this area, and hopefully IRR will come up. And investors will come aboard.
May we live in interesting times!
JL
contd..
DE-RISKING : IRR LITHIUM
Per the SI Capital Broker Note of July 2021, the further de-risking is EXPLORATION POTENTIAL TO EXTEND THE LIFE OF THE POTENTIAL MINE. Two weeks ago, IRR reported the results of further exploration drilling near their lithium project and the results were in line with the main deposit approx. See the detailed result. Also in the RNS, it was said that METALLURGY is going on with PLANNED STUDIES. So, IRR is working on all pistons. One can see why - the more SPODUMENE, the more wonga given SC6 is high purity.
MAJOR DE-RISKING
For any project in mining, FINANCE IS THE MAJOR DE-RISKING EVENT.
Remember Nemaska - I escaped that one given the co could NOT raise further capex. Remember Sirius - same thing. One went to BK and in the hands of creditors whilst the other was taken over by a major for some 5p, which was less than was had already been put in.
ALISTAIR FORD ON IRR-PIEDMONT DEAL : "BEAUTIFUL PLACE TO BE IN." [Video Interview with Proactive Investors UK]. Yeah, it was the CAPITAL PAID FOR plus for studies etc by Piedmont which Mr Ford said does not happen often.
IRR TWITTER: I went through the latest tweets and saw 2 that said something like Piedmont was there 7/14 days and they realised that if they didnt want it, others want it. As you all know, there are 2 pictures on IRR Twitter feed, one showing IRR team with SIBAYNE STILLWATER group and another with a CHINESE group but it was not said what both of these were interested in. LoL, yesterday, Sibayne did a US$490m deal with Ioneer [ASX] to JV into their Lithium Hydroxide project which will need capex US$785 million which is not all that easy to find but the presence of Sibayne may help etc to what extent? Hence, why the SPODUMENE projects are the more attractive in that CAPEX for IRR is U$$ 6 8 Million [DFS $17m USD]. IRR Payback is <1 yr. =====CASH OPERATING COST FOR IRR IS US $ 2 4 7 /t for 6% spodumene which is SC6.====
IRR is 125%. Brokers usually want 30% IRR base. Should Piedmont not want to go all the way, all monies are NON-REFUNDABLE but please check as I read the RNS quickly. Mind you, the JV Piedmont IRR deal is "CONDITIONAL B I N D I N G AGREEMENT." Just mentioning for accuracy but put oneself in the shoes of Piedmont. They now have some 9.91% IRR shares at 20p and 25p plus 50% of the JV. The PLS AUCTION OF 14.9.21 STUNNED THE MINING WORLD & sent tongues wagging around the world per AFR. No wonder - the S & P Global a/c mgr said the price was "insane." It turned heads including Macquiare. FINANCING IS RECOGNISED AS T H E MAJOR DE-RISKING EVENT. This has already happened.
CORE LITHIUM
On 15.9.21 they told the Australian Stock Exchange that there are FEW SPODUMENE PRODUCERS coming on, PLS AUCTION PRICE & timeline sent Australian*s into a frenzy. Core*s mkt cap is A$700m. Ioneer*s mkt cap is A$1.14 Billion. Both at DFS stage although Core, I think has already got quite a bit of the capex although if Ganfeng puts
PIEDMONT -IRR JV
50% of project.
EBITDA : US$105m [100%]
EBITDA: US$52.5m [50% IRR] or £37.68 Million [Exchange £1=US$1.38]
P/E 10= £376 Million [37.68 x 10]
P/E 5 = £188 Million [37.68 x 5] = 34.74p
Current Mkt Cap: £112 Million @ 20.72
====
ONE CAN SEE THE LIBERUM BROKER TARGET OF 32P FOR IRR VS 34.74p as above - shows the broker used a conservative figure of P/E5. There*s a small variance because at the time of the 32p, the mkt cap may be a bit different etc. A useful LITHMUS TEST to COUNTER-CHECK.
==
PIEDMONT-IRR JV
US$102m
IRR CASH POSITION US$28m
Total: US$133 Million or £96.37 Million [Exchange rate £1=US$1.38]
IRR CURRENT MKT CAP £112m @20.72p [16.9.21].
====IRR IS TRADING CLOSE TO ITS UNDERPINNED Piedmont Deal + Cash=====
SPODUMENE SC6
SI Capital called IRR spodumene as HIGH PURITY. Pilbara Mineral*s spodumene is SC5 at US$2,400 whist SC6 went for US$2,500 at auction @PLS, 14 Sep 2021 and reported to the Australian Stock Exchange via an RNS/ANN.
Macquarie went on to CALCULATE the NEW POTENTIAL EBITDA for Pilbara Minerals if on US$2,400 and not US$900+ per last reported a/cs.
In the same way, one can also follow standard analysis to calculate the IRR potential if SC6 can fetch US$2,500 [IRR*s spodumene is of high purity quality].
IRR Scoping Study: Sale price used US$650 for SC6.
If US$2,500, that is approx 4 TIMES MORE roughly for easy cals.
So, EBITDA US$105m [100% project]
==IRR EBITDA US$52m [50% JV share]
==4 TIMES MORE = US$ 2 2 0 Million [52x4] of £ 1 5 9 Million [£1=US$1.38]
Using P/E 10: 159m x 10 = £ 1 . 5 9 BILLION IMPLIED MKT CAP =£2.89 per share IRR [50%]
Using P/E 5: 159 x 5= £795 MILLION IMPLIED MKT CAP = £ 1.46 per share IRR [50%]
---
Core Lithium: SPODUMENE, Production End 2022 potential after Investment Decision.
Stage: DFS
Mkt Cap: A$700m or £370 MILLION [£1=A$1.89] vs IRR MKT Cap £112m.
Core*s Finniss Lithium project: 9.63 Mt @1.31% Li2o vs IRR 14.5Mt @1.3% Li2o
ANNUAL PRODUCTION: IRR 295k tpa vs Core 175k tpa [Source: SI Cap & Core DFS]
CONCLUSION:
As stated above, IRR*s current mkt cap £112m and sp of 20.72p is UNDERPINNED by the Piedmont JV US$102m + IRR cash US$28m.
Please note for the AVOIDANCE OF DOUBT, the POTENTIAL EBIDTA is a illustration using the SCOPING STUDY FIGURE [IRR latest Presentation] and JUST MULTIPLYING IT BY 4 TIMES MORE just like what Macquaire did for potential forecast PROVIDED this is going forward given by 2025, both Macquaire & SP Global stated the lithium mkt is going into "shortage" per yesterday*s post. I have done NO new cals.
So, no wonder why the Core Lithium MKT CAP is A$ 7 0 0 m [£370m] and on Hotcopper they are post about a A50c party and by Xmas 2021 a A$1 party given the current share price is A45.5c.
Just for discussion. DYOR.
Fri, 17 Sep 2021.
Correct JL. I just thought it worth metioning as you had a separate price target and thesis related to EBITDA.
But you're right and so is Jollifant. I suspect you're right on your other point as well but we'll have to see there.
Hi Bozi
Good point, thanks for the correction. But presumably this is also still using the value of $650/t rather than a more up to date price of almost four times that. I couldn't see reference to it on that report but I may have missed it. If that is correct then you could easily argue that the £250m is under-estimating the value by about half.
One other thing I did spot on that report was the IRR post-tax relative to Piedmont's other projects. 125% for Ewoyaa vs 31% and 34% for the other two! No wonder they were keen. Post demerger , I could see them making a bid for the other 50% although they will probably complete the first phase first.
JL
IRR will also make profit from the Piedmont 50% offtake agreement. From a recent RNS - 'Offtake pricing will be determined via a formula, which is linked to the prevailing price of lithium products, ensuring IronRidge captures value-add margins.'
Good analysis JLite.
One pickup if i may - the $345m NPV8 is for whole project i believe. Post tax. So if we assume that Piedmont take up their full option we're looking at £125m for our half based on the outdated SC6% price, to which we should also factor in the increase in resource from expansion drilling.
It's easy to see how an updated JORC and DFS will be huge derisk events. The discount factor will quickly fall away and we'll be left with 50% of a much larger figure. If we get that far of course.
Thanks for this. Interesting reading.
Based on all these figures I have two price targets in mind:
Current price of around 21p values the gold assets at about £33m. (EV less Lithium based on $87m value of the investment by Piedmont (excluding the share purchase which does not really affect the value of the mine.))
Price target 1: $105m EBITDA at $650 times four based on current prices divided by 2 for the 50% they will own = $210m for Lithium. This equates to £153m so if the gold is valued at zero the EV should be the same for a share price of 31p.
Price target 2: $345m of NPV8 in this note for the Piedmont 50%. So approximately £250m or 45p per share valuing the gold at £0.
How they construct the demerger will be key. If they split the cash 50/50 and just offer 1 share of gold and one share of lithium to each shareholder. The lithium business would be significantly undervalued and prime for being taken out by Piedmont. So more of the value needs to go to the Lithium business. But that could make the gold assets incredibly cheap!
Interesting times. I am topping up at this price.
JL
https://sicapital.co.uk/wp-content/uploads/2021/07/IronRidge-Resources.pdf dated 16 July 2022
SI Capital broker note on IronRidge Resources.
"IRR has secured a US$102m conditional BINDING agreement with Piedmont [Nasdaq & ASX quoted]. Todate, PLL [Piedmont] have secured lithium concentrate SC6 to TESLA. "
"The strategic IRR conditionally binding agreement will allow PLL TO ACQUIRE 50% of the annual C6 production of HIGH PURITY, coarse grain SPODUMENE concentrate with a LOW CAPITAL cost, LOW OPERATING cost, particularly LOW CARBON footprint within a P R O - MINING JURISDICTION."
"This ultimately gives IronRidge*s Ewoyaa project the CREDIBILITY to be seen as a LOW COST, GLOBALLY SIGNIFICANT SOURCE OF SPODUMENE and secures the teams position in the growing international battery supply chain."
"...STRONG FINANCIAL RETURN, EXTENSIVE EXPLORATION UPSIDE." {"Opportunity"]
"2021 Scoping Study."
"Capital cost US$68m" {Per details from RNS, PLL will pay for this in the US$102m staged deal with IRR}
"For Ironridge, having SECURED 50% of C6 PRODUCTION, with no first rights of refusal obligations & with FINANCING SECURED TO PRODUCTION, the team are able to look for additional agreements."
Comment:
PLL took shares in IRR at 20p and 25p with 9.9%+ stake in the co & 50% JV with IRR.
What PLL does with IRR spodumene concentrate is up to them given SI Capital , broker said PLL has an agreement with Tesla as above. The broker note is helpful given all the discussion. Hope this answers a lot of the confusion.