RE:Current Price of Neo Lithium Corp Could be as High as $180While I agree there is considerable upside in this stock, your analysis is too simplistic bordering on somewhat misleading due to inadequate or naive assumptions.
You are assuming NCL will receive current market price for LCE when there exists the strong possibility that if an offtake agreement gets signed that a good chunk of production might get locked into a set fixed price.
You completely neglect the impact of corporate income taxes annually which will significantly reduce the net profits as well as your NPV calculation.
You have an unrealistic, biased view that Lithium prices can only move in one direction (i.e. UP) and that it keeps doings so to infinity. This is obviously incorrect because the amount of Lithium will only go up only until the existing fleet of gas powered vehicles globally gets replaced by EV's. When it reaches near that point then you will likely see a major recycling program initiated of this metal and prices will either stabilize at a new equilibrium or taper off from the trend of escalating prices.
Also, there exists R&D into improving battery technology that both extends the shelf life and improves the length of charge for extended driving range. Such a breakthrough will have the effect of providing flexibility to auto manufacturers to reduce the number of batteries required per vehicle in the future.
Again, I am not against people providing some type of analysis to support their claims and prefer this rather than the standard cheerleading with unbacked price assumptions. But there is also an evil to providing ignorant misleading analysis in order to support unrealistic pie in the sky price targets in the triple digits too.
LithiumNPV wrote: Lithium Carbonate Equivalent (LCE) is $22,000 right now (but much higher than this in China). If it only costs $2,000/t to extract that's almost $20,000 profit/t. In light of this any capital costs are miniscule. Since lithium only takes up 2% of the cost of a battery, LCE could easily go to $50,000 or higher and would have little impact on the price of the battery. But let's be conservative in our estimates.
$20,000/t x 4 million tonnes (end result, conservative estimate) = $80 billion profit stream over ther life of the salar.
4 million t/yr x 75,000t/year = 53.3 years of production.
Discount rate = 8%.
75,000t/yr x $20,000/t = $1.5 bilion profits/yr.
The net present value (NPV) is $1.8 billion / 100,000,000 shares (more than the number of current shares) = $180/share right now!!!
The current share price could be as high as $180.