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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 So if we assume that Piedmont take up their full option we're looking at £125m for our half based on the outdated SC6% price, to which we should also factor in the increase in resource from expansion drilling.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
Agree Swest42, as Toro said we will either get bought out completely or into production in the not too distant future when it will be multiples of where we are. Traders can trade and LTH can sit back and reap the end game.
SP / value anomaly
I'm just not that phased by the near term SP action anymore, because the fundamentals are patently there in spades.
Its happening; if someone wants to keep selling and send it south of 20 then so be it, won't change end outcome.
when 30 plus happens I will barely blink, because it will go much much further
TW. utter tosh. garbage
STOP STOP , I KNOW WHAT YOU GUYS ARE GETTING AT. I KNOW THE PRICE GOES UP AND DOWN A LOT AND WE SEEM TO HAVE LOADS OF LOADS OF NEWS BUT IRR NEVER GETS ANYWHERE.
ITS NOT BECAUSE OF ME AND MY RESEARCHERS ITS PROPBABLY BECAUSE OF THE MOON AND THE TIDES.
I KNOW IT LOOKS LIKE A COINCIDENCE BUT ITS NOT ..OK?
Jollifant - if we assume that none of Assore Ltd, Vincent Mascolo or Neil Herbert are selling but everyone else has (unlikely) then that leaves us with 45m shares to churn through.
There have been plenty of 1m+ and 2m+ volume days so it's safe to assume any overhang is being worked through.
The largish constant selling above the 20p level suggests to me that the placing shares at 20p on April 27 are still being offloaded for small profit. 60m is a lot of shares to shift and who else would have so many shares willing to sell at these levels after the great news reported recently?
A perfectly reasonable post thanks for reply.
IRR has featured unfathomable up and down since I've been in since 2017
Albeit I think the Li market is great atm and we have a secure route to market, those up and down will likely continue. Its mining. Its AIM.
Baku, you can have a cap doff and a post recommend. You have spoken sense. Fair play. I knew you had it within you.
And to save you the effort of replying, nobody cares Bozi. I know, I know.
Why? For the very same reason why it went to 19p 3 weeks ago. Just because Piedmont is funding the project and lithium prices going up it doesn't mean the share price will only go up. A lot of people use charts and trade short term and simply cash in after a decent rise so the road to production will be bumpy in terms of the share price. It will do up and down. A lot of people try to find logical sense in the share price behaviour and that itslf is sometimes impossible to do. However I must say the trend for IRR share price is upwards and in a few years it will be much higher than today. It's just it's never that straight forward and there will be plenty more ups and downs.
It is rare to find a miner that;
a). Has a known (plentiful supply of) valuable resource (lithium)
b). Is fully funded to production with a partner who has paid a premium price for shares
c). Will have 50% of production (to sell to whoever they like, into a market that will be crying out for the product)
d). Has a separate gold business which will be spun off (to the benefit of shareholders)
e). Is not under a constant threat of shareholder dilution whilst on the road to production
These are the simple facts, this is an absolute belter of a Company and I have increased my position considerably this week at these bargain prices.
tbh we're likely both more interested in bigger picture.
lets get this demerge done, personally I think the really significant next stage is get this decoupled form the gold and into the pure play market
my posts have reasoning i.e spod price - look yourself
Why do you think it will go to 18. Perfectly valid view, but why. Context please. I'm completely open to debate, and to be corrected.
Swest, you are saying you are not ramping. A few days ago I wrote something and you said that I was deramping. So when you say something it's ok but when others say something then it's wrong lol.
Truth hurts I know, MickeyMouse. That's why you are trying to be abusive, but your words only make me laugh more.
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.
P.S.
--Cant find any co that has had a JV with a large major that included PAYING FOR FULL CAPEX, STUDIES ETC and yet still keep 50% - IRR / Piedmont Deal of US$102m in stages?
--Vincent Mascolo,CEO of IRR in an interview [video] said the govt at the highest level is keen on the project. Public info that IRR*s project will be the first West African lithium project. Also, the govt is keen not to just rely on gold exports. It was reported that Stillwater was keen to do the Ioneer JV lithium deal given the gold price etc [3rd battery metals deal].
--Lithium is in the news. FT reported the Sibayne Stillwater deal and also mentioned the rising prices for lithium carbonate /hydroxide.
-- Per Macquire in reporting on PLS*s auction prices achieved for their spodumene said that from 2025, supply shortages. S & P Global "Cobalt, LITHIUM to move into DEFICIT by 2024, 2025." S & P Global, 28 Apr 2021. So, two sources. To check, type up the S & P Global title.
- GOLD SPIN OUT TO COME FOR IRR.
Current Mkt Cap: £118m @20.72p
Piedmont JV 50% Deal with IRR: US$102m
IRR Cash Position: US$28m.
POST PIEDMONT JV DEAL 50%: 14 Sep 2021 wherein spodumene prices at auction achieved US$2,500 for SC6 [IRR is SC6] vs IRR earlier study US$650 Sellling price to produce US$105m EBITDA [100% of project] so that is NEARLY 4 X MORE.
Some basic info:
IRR lithium project: SPODUMENE [not lithium carbonate/hydroxide]
Resource Size: 14.5 Mt @1.3% Li2o with "Significant exploration upside" per IRR presentation.
IRR Selling price for spodumene SC6: US$650/t.
Cash US$28m.
EBITDA: US$105m @US$650/t selling price for spodumene SC6
Piedmont JV 50% US$102 Million - Piedmont will pay the FULL CAPEX for IRR +all expenses, technical etc in stages.
IRR info: FAST TRACKING
Mkt Cap: £118m @20.72p
--AUSTRALIAN AUCTION RESULTS FOR SPODUMENE date 14 Sep 2021-
PLS of Australia issued an RNS/ANN to state their spodumene achieved US$2,400/t for SC5 and US$2,500 for SC6. Macquiare reported on PLS and said that PLS*s EBITDA would jump given the last price for EBITDA SELLING PRICE WAS US$900/+ achieved, now US$2,400 SC5 and US$2,500 SC6.
So, too for IRR*S EBITDA - selling price in study US$650/t vs US$2,500 SC6 14.9.21 auction if one follows what Macquarie said for PLS? That could potentially be NEARLY 4 TIMES MORE.?
FINNISH LITHIUM PROJECT, NT,Oz [SPODUMENE, not lithium carbonate/hydroxide]
The co*s share price jumped 27% and then a bit more the next day. The Australian Stock Exchange wrote to the co to ask if there is info that is NOT in public domain. The co replied on 15.9.21 that they are one of the few next lithium producers to come [Reason 1]. Reason 2: Another Oz co*s auction results as above on 14.9.21. Reason 3: The co will make an INVESTMENT DECISION and PRODUCTION could be then END 2 0 2 2 . So, from 15.9.21 to end 2021 is another 3 mths plus and then 1 YEAR. So, for SPODUMENE, the PRODUCTION DATE is not 3-4 yrs as posted on the forum as there could have been confusion over spodumene and lithium carbonate/hydroxide which takes longer. This co*s MKT CAP: A$700 MILLION /£370 Million [Exchange rate £1=A$1.89 currently]. This co*s SPODUMENE RESOURCE: 9.6 Mt @1.3% Li2o vs IRR 14.5 Mt @1.3% Li2o. BOTH SPODUMENE potential producers.
SIBAYNE STILLWATER 50% JV US$490 Million with Ioneer.
Ioneer Mkt Cap: A$1.14 Million on ASX, Australia.
Stage: DFS
Construction 1st half 2022. Financing 6 mths. 1st SHIPMENT 2ND HALF 2024 for LITHIUM HYDROXIDE.
Capex: US$785 Million.
Lithium is in all the news yesterday relating to the lithium auction price achieved by PLS on 14.9.21 and today, the Stillwater lithium JV news today.
Adding to the discussion and providing basic info. The Finniss lithium project RNS/ANN of 15.9.21 is INDUSTRY NEWS as to the time taken to go to production - well known that spodumene capex cost US$60m+ approx and does not have to set up special plants etc which takes more time. Hence, why Stillwater - Ioneer deal is also of interest to show that LITHIUM HYDROXIDE [or even carbonate] PRODUCTION TIMES AND CAPEX is longer and more than just SPODUMENE.
Dyor.
Thur, 16 Sep 2021. Answers to the discussion.
I don't think anything is a no brainer where expending hard earned funds is concerned (I'm just not a fan of the term nothing personal), however I can't see you getting a better entry than this. no advise and GL
Not a shareholder here yet, but I’m watching this carefully and I’ve got to say this is a bargain being overlooked by the market at the minute.
Hoping to get a chance to buy in when funds are free and would be a no brainer at these levels. I would suggest patience to all those holding here, great company with a great resource.
40% of trades today automatic trades, many at 21.4 price range earlier. Yesterday had large number of autotrades as well, also at 21.4. Volumes also haven't been low, so doesn't feel like an artificial drop to me. All seems to support what some others have said about there being a persistent seller offloading at these prices, keeping sp down.
clearly mkt thinks different. this SP action lost on me. clearly something afoot I don't know about
if anyone knows something factual feel free. factually spod prices up
Do you have to get the old WD40 out to spray your brain to get that familiar stuck line out again? Bakuraku.