Prepare For Blastoff When A Monster PFS Result Arrives Soon he upcoming PFS due by Spring (March-May), 2023
Given the current China spot LiOH price is around US$80,000 as of November 2022, this suggests that there is plenty of upside to the NPV at current spot prices.
We expect the NPV8% for the upcoming PAK Project PFS (integrated project) to be in the range of US$2-4b, depending on what price and production assumptions are used. Over time, this may follow a similar trajectory higher as per Sigma Lithium (see below).
Sigma Lithium (SGML) announced in 2022 a massive increase in their project after-tax NPV8% to US$5.1b based on a 531,000 tpa spodumene production project (selling at US$2,247/t). Incidentally, they recently updated this to include all 3 stages (768,000 tpa spodumene production) with an after-tax NPV8% of US$15.3b. Frontier's Project size and grade suggests it is potentially capable of following in Sigma Lithium's footsteps, plus has an advantage of very low iron content and being able to produce highly priced "technical" grade spodumene.
European Metal Holdings [ASX:EMH] updated January 2022 PFS (using LiOH selling at US$17,000/t, 29,386tpa LiOH production, upfront CapEx US$644m) resulted in a jump in their Cinovec Project NPV8% to US$1.938b.
Frontier Lithium 100% owns the highest grade spodumene project in North America at the PAK Lithium Project in northwestern Ontario, Canada. The Resource is in the top 3 for size and number 1 for grade in North America. 2022 drilling has potential to grow the resource significantly beyond the existing M&I&I Resource of 41.9 mt @1.54% Li2O.
Frontier's PAK Project looks quite likely to be the "Greenbushes" of North America and potentially become the highest grade, largest lithium spodumene project in North America.
Valuation looks very attractive at the current market cap of C$453m (US$334m) at 34% of the PEA after-tax NPV8% of US$974.6m (C$1.22b). If the PFS (due by March-May, 2023 ) delivers an after-tax NPV8% in the order of US$2-4b, then the stock will suddenly look very cheap. Market Screener shows a price target of C$4.20, representing 108% upside. We see further upside by 2026-27, assuming Frontier makes it to production.
source:
https://seekingalpha.com/article/4564483-frontier-lithium-prepare-for-blastoff-when-a-monster-pfs-result-arrives-soon?mailingid=29981719&messageid=2800&serial=29981719.1623&utm_campaign=rta-stock-article&utm_medium=email&utm_source=seeking_alpha&utm_term=29981719.1623