GreenRoc Accelerates their World Class Project to Production as Early as 2028. Watch the full video here.
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VSA Capital- Ironridge Resources
Sep 2, 2021 audio between VSA Andrew Monk, broker & Renken, VSA Geo:
"Great co, we love it, way cheap.
Good drill assays.
Extension, In-fill.
New target-good here.
Assay 20-30, 1.3-1.6% lithium.
<50m. Looking very smart.
>25,000 metres. Commence.
RESOURCE DEFINITION - metallurgy."
[Comment: So, await resource definition?].
VSA 14 Sep 2021 - Ironridge Resources
Audio interview between A.Monk & Renken:
"Keep coming up with good...
More drilling results
TENS OF METRES [couldnt catch grade]
60m-100m , outcrop , depth. [Kindly check, think it means open to depth?]
Expansion.
5 rigs - infill.
For HIGHER COMPLIANCE Feasibility Study. LOOKING GOOD."
Link: https://twitter.com/VSACapital
==
Tweet by Zinnwald: 3 hrs ago, 21.9.21
"Lithium production must QUADRUPLE to 2M TONNES B Y 2 0 3 0 - FROM 345 kt currently to meet the predicted 35% surge in EV sales. Its the biggest challenge and opportunity facing the lithium industry, says Fastmarkets."
Tweet 2 by Zinnwald:
"According to Mining.com , SURGING DEMAND for lithium and raw material SUPPLY SHORTAGE has led to the HIGHEST lithium prices since 2018. Battery grade lithium carbonate prices increased by over 20% in the first half of Sep." [Comment: Note that IRR does not produce lithium carbonate but just SPODUMENE lithium whose price increases are even more phenomenal going by Pilbara*s auction on 14.9.21 via an RNS to the Oz Stock Exchange at US$2,400/t for SC5 & US$2,500 for SC6. Previous auction was only US$1k+]
Link: https://twitter.com/ZinnwaldLithium [Industry news]
Comment: Helpful to know the SUPPLY VS DEMAND needs. Thank you Sorbie for the invitation to your 329 member group for IRR which is appeciated but I do not join private groups as I dont have the time. Ah, so that*s where everyone has gone to given I was wondering why everyone had disappeared to.
IMHO Piedmont will want as much lithium as possible. Keith Phillips even says that this price isn’t going south anytime soon.
Video link:https://video.foxbusiness.com/v/6273545324001
NEWS - I am sure your input would be appreciated on the Ironridge Resources Group on Telegram. I am one of 329 members. Lots of good research shared on there.
NEWS - I was in SOLG and IRR back in the 40p + days and now all in on IRR. Appreciate your recent research. Enjoyed reading it. Thanks.
"F u t u r e s aid volatile lithium mkt: S u p p l y seen as k e y risk."-Fastmarkets, Tus, 21 Sep 2021
"The industry used to rely on f i x e d pricing, which meant that someone always won and someone always lost. Both Chicago Mercantile Exchange & London Metal Exchange have l a u n c h e d FUTURES contracts based on Fastmarkets lithium prices."
"Longer term, the biggest risk facing the industry is LACK OF SUPPLY. Lithium demand is set to grow about 150,000 tonnes this yr, to a total of almost 500,000 tonnes, from 320,000 tonnes according to Jimenez."
"A lack of investment & the time it takes to bring a mine to production are key risks in getting that supply a/c to Will Adams, head of battery metals research at Fastmarkets. It can take as little AS TWO YEARS to build a downstream facility...."
--
Comment:
Futures as above is now a NEW development in price discovery and moving from fixed contracts usually from 1 co to another. Pilbara Minerals as we saw from CNBC International is now selling via a online a u c t i o n platform.
TIME TAKEN TO DO A DFS
I found an example from Piedmont. Title: "Piedmont launches DFS for concentrate operations, 2 Dec 2020 RNS/ANN..
"DFS will study a 160k/yr quarry and SPODUMENE concentrate. DFS is expected to be completed in MID-2021 with a CONSTRUCTION decision to follow."
So, from 2 Dec 2020 on announcement of DFS commencement to mid-2021 is a---- short 7 months.---
Thereafter, Piedmont will make a Construction decision.
One can see from Core Lithium [Finniss lithium spodumene project], that upon a Investment Decision , production will be END 2022 - appears to be able 1 YR TO FACILITATE PRODUCTION.
I had hoped that others who are investors [as opposed to traders who are interested in share price] will take the initiative to post what are significant developments relating to lithium prices etc. This will mean that more than 1 person will provide some info. I went through the interims of IRR yesterday and found quite a lot of info.
From Brookings on Twitter yesterday, Ghana is hoping that tourism etc will help with unemployment. So, it is helpful given that Ghana will welcome IRR*s lithium project which will bring in revenue and therefore taxes to the country, not excluding employment.
To read and check, kindly call up the titles. As for caps, I use it for my own benefit. When I want to look up dates, resource size etc to reference lithium projects, its is easy when I check my profile and can see the info in caps more easily than to read thru everything. I can be concise but it will mean that in Canada, others will have to be nuanced in what is happening. Eg, I could just type : Lithium price - Futures have been launched. LoL - would anyone be able to catch any info from that. Hence, it needs explanations like fixed contracts in the past, auction PLS on 14.9.21 and now futures and what it means etc.
Thank both you and Jlite for some informative and interesting posts, news. Really helpful and insightful. My one small piece of feedback would be to drop the random capitalizing of certain words. It makes the posts harder to read in my experience. But different folks, different strokes and all that.
SM
contd
purity is an important factor as keeness of buyers is based on this GRADE FACTOR ie SC5 / SC 6.
13] When does the DEMAND vs SUPPLY meet equilibrum? When will SUPPLY shortages start and how long will they last?
Who are the spodumene potential producers to come? Brokers usually show a CHART.
Where does IRR sit in the CHART? IRR happens to be THE CHEAPEST together with Sigma for all lithium co*s as shown by Toro_AIM believed to be from the broker.
14] What is the govt stance on mining? N. Mather explained about this in the early days.
Important to know as countries appear in RANKING reports. SI Capital provided the answer as said including Vincent Mascolo in his interview.
15] What is the JORC resource for IRR ie size and what is the size for say Core*s Finniss that is coming to market. What is Core*s MKT CAP? Important to see what the Austalian mkts are valuing potential spodumene co*s.
16] Share price at 20.72p = £112m IRR MKT CAP - Underpinned as show by Piedmont US$102m deal [JV 50%] + IRR cash US$28m. IMPORTANT - so appears the rest is FREE for gold? What is the fair value for the gold project/s?
17] Will IRR pay a dividend? People have asked but I dont recall what Mascolo said as I wasnt paying attention on this earlier.
18] How much more lithium spodumene is there potentially ie EXPLORATION UPSIDE?
One has to look at the anomalies in the licence area.
19] What is the broker target? Can one update on the target price by changing the selling price like what Macquaire did for Pilbara?
20] What are the timelines potentially? One can only go on Core*s project via research to see how long it take to get production to market ie end 2022 once Investment Decision done.
21] The gold project in Cote d* Ivoire - is there potentially a JV for it? Has Vincent said anything in interviews given the IRR lithium Piedmont JV deal came out without any word prior to or hint? What is planned for IRR Chad? I have listened to both Mascolo & Mather on this.
22] Iron Ore - I have listened to Mather*s interview [early]. What is the vision for this current and going forward?
23] What about the other projects? I have not kept up to date.
24] So much more. What is the RISK VS REWARD? ALL NEEDS TO BE BOILED DOWN TO POTENTIAL $$$ - that is what its all about.
25] Any more good surprises like Piedmont?
26] If the co is bought for its lithium, what does M & A say? Has V. Mascolo said anything [CEO of IRR]?
27] What does DRG Global, mother co say about IRR in their Qtr Activities RNS/ANN to the Australian Stock Exchange?
So many question that should be asked as DUE DILIGENCE BEFORE PRESSING buttons.
Hope that clarifies. If one doesnt ASK and find OUT, then one is investing blind on NO DUE DILIGENCE which means one is moved by info like IRR*s lithium is not worth digging out without any fact based link/evidence etc.
Mon, 20 Sep 2021. Thank you all. That*s all from me. You all can take it up from he
Link:
https://twitter.com/ACentaurMedia/status/1439856052418326534 dated Mon, 29 Sep 2021 on CNBC International - Interview with Ken Brinsen, CEO, Pilbara Minerals of Australia on the lithium spodumene price auction whose news went round the world & the mining industry.
Just listened to it:
"A lot of more buyers.
Electronic Sales.
BMX Online Platform to sell {Like Ebay}.
BUYING POOLS.
LOTS OF BUYS.
30 businesses.
17 biz [think he meant auction buyers?]
Latest auction last 2 hrs.
In the last 5-10 mins [think he meant action akin to auction keeness?]."
A bit hard to hear.
As for Jollifant and nothing to discuss, then here are some of the questions I asked myself BEFORE pressing the button for IRR. If I buy more than burger money £50, then I have to ask questions which everyone should ask as Due Diligence per FSA advice:
1] What does IRR potentially produce? Some may not know the diff between lithium spodumene, carbonate or hydroxide. Important as capex is different & time to bring to production, hence the confusion earlier.
2] What is the DEMAND vs Supply curve showing? Important so as not to be in the 1 side more than the other. This is a bit harder to find for day-to-day accuracy as industry gives forecast over a 4-5 yr period.
3] Organisations like S & P Global charge thousands I believe to join wherein they give out data. Like all commodities, how many NEW production co*s in spodumene is coming to MKT, when? What are their tpa per yr production? What is their COST base & IRR*s cost base? What is the IRR Scoping selling price? What is the current selling price? In the past, selling is 1 to 1 negotiation with co*s, now AUCTION. How does that work out ie in terms of pricing?
4] All commodities are based on PRICING [Selling & Cost]. So, details have to be known to know HOW MUCH GIVE THERE IS.
5] What are the co*s like Pilbara saying about buyers? What is the S & P Global report saying about buyers in OCT 2021? Are buyers still in strong demand? Answer given as earlier post was from today about Oct 2021 buyers.
6] What underpins IRR mkt cap? How much is underpinned by cash & Piedmont JV deal?
7] Is the Piedmont JV deal of 50% norm or not norm. If not, how much is 50% of EBITDA?
8] Is there further UPSIDE from exploration?
9] Are there risks eg funding the DFS etc? Why? Piedmont funding US$17m.
10] Is there CAPEX RISK that it cannot be raised if mkt conditions are volatile? NO, Piedmont is financing 100% of capex for IRR at US$68m.
11] When IRR starts production, how much will the EBITDA be. WHAT IS THE SENSITIVE ANALYSIS if SELLING PRICE is US$2,500 for SC6 then? How much is EBITDA if earlier price of US$1,400 region?
12] Peer analysis - is IRR*s spodumene purity grade good or better than Core Lithium & Pilbara Minerals who just sold at auction on 14.9.21? Core & Pilbara are SC5 at 5%-5.5% vs IRR 6%.
Most importantly, PURITY is important and SI Capital said "HIGH PURITY." Purity is fac
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.
S & P Global [Platts], 2 hrs ago, Mon 20.9.21:
"Chinese Lithium Carbonate prices surge by over 85% in Aug 2021.
What*s happening? The surge in prices have carried over to lithium raw materials with SPODUMENE concentraate prices SURGING up by over $1,000/mt on the WEEK to $2,444/mt SEP 17, 2021 on FOB, AUSTRALIA BASIS."
"What*s next?
SELLERS are expecting EVEN H I G H E R PRICES FOR O C T , 2021 DELIVERY with demand showing NO SIGNS OF LETTING UP."
Link: https://www.spglobal.com/platts/en/market-insights/blogs/natural-gas/092021-ctracker-gas-prices-oil-supply-lithium-butadiene
Comment:
Kindly note that for CORE Lithium*s Finniss project, NT, Oz, they have not yet made an "Investment Decision" yet as norm. Once that is made, then, production starts END 2022.
IRR has said "FAST TRACK" so we await further updates etc. The prices for lithium FOB, Australia basis is in US$ as reported by PLS [Pilbara Minerals] on 14.9.21 via their RNS/ANN to the Australian Stock Exchange which was quoted in US$. PLS sold SC5 which is 5% at US$2,400 and SC6 was cited by PLS at US$2,500/t for SC6. IRR sells the SC6, hence the attractiveness also.
For reference, Finniss [Core] is one of the LOWEST cost and HIGHEST quality grade lithium in Australia per their blurb. As said, the broker has shown IRR as THE lowest cost capex together with Sigma and CORE*s Finniss is further up ie higher cost than IRR [ref: screen shot by Toro_AIM on Twitter re: IRR]. One can see Kodal further up and PREM at the top of this said chart.
Thank you.
Mon, 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