RE: Good summary17 Mar 2022 09:33
As I strayed onto the subject of Prospect Resources, given it too is proposing to produce petalite :- “Our sales team has been receiving pricing feedback from potential customers in the glass & ceramics market that our low iron petalite would receive
premium pricing over prices available in the chemical market, validating the advantages of our product differentiation from classic spodumene producers." - it is therefore perhaps illuminating to look at their market valuation.
1. Their MC is currently 386M AUD = 215M GBP
2. They have no production at present.
3. They are based in Zimbabwe
4. Their Arcadia JORC resource (0.2% Li2O cutoff) is quoted as 72.7MT ore grading 1.06% Li2O containing 770 kT of Li2O which is roughly 1.68x our petalite resource of 71.5MT ore grading 0.63% containing 450 kT of Li2O
5. If it were simply a matter of comparing resource sizes then you might expect our MC, JUST DUE TO THE PETALITE, to be 215/1.68 = 128M GBP (i.e. 66% up from where we are now) - however it should be higher than this because
a) we don't just produce Petalite but are already making profits on Tin
b) our mine is not in Zimbabwe but a much more stable country
c) our mine and processing plant is up and running
d) expansion and by-product production plans are already in place
e) the quote JORC resource grade is irrelevant because the stuff that is going to be processed for the Lithium has already been crushed and preprocessed before it get processed for Lithium - hence the effective Li-grade at this point is already much higher than 1%
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