Some thoughts on the NPV ...CRE’s BFS is coming. The NPV will be highly influenced by the LCE’S selling price that will be used in calculations (I am not overly concerned by the capital or operation costs since I think that the PEA provided good estimates of these costs). How do we determine LCE’s selling price when articles mention lows of 8,000 $USD/t and highs of 25,000 $USD/t?
I looked at two revised BFS published lately (Let me know if you are aware of other BFS published): Nemaska’s updated BFS in April and Galaxy Ressources’ revised BFS for the Sal de Los Angeles project in August. Nemaska used LCE’s price of 7,000 $USD/t (9,500 $USD/t for the Lithium Hydroxide) while Galaxy used a range from 11,000 $USD/t to 13,900 $USD/t (Sorry, no 25,000 $USD/t). To determine which one is the best, I looked at market’s reactions. Following the NR, Nemaska’s SP went from 0.65 $ to 1.20 $ in April. Galaxy’s SP did not move following the NR in August. (Note that there may be other reasons that may support market’s respective reactions.)
I think that Galaxy’s figures are not enough conservative which would partly explain market’s reaction. Nemaska’s figures seem more appropriate. However, new factories were globally announced since April, and accounting for the fact that CRE has higher purity for their LCE, I think that a good conservative LCE’s selling price would be 8,500 $USD/t. This price leads me to a CRE's NPV of close to 1.3 B $CDN. If the market reacts the same way to CRE’s NPV than to Nemaska’s NPV released in April, accounting for the difference in NPVs and in number of shares outstanding, I think possible a CRE’s SP of around 1.40 $ few weeks after the BFS release.
Needless to say that this should be followed by the financing news, which will increase even more the SP. I am long all the way.
JMHO
PADAP23