Lithium Price Sensitivity I read Cantor Fitzgerald's analysis again this evening, someone on this board shared it a while ago and I kept a copy of it. The document is dated from May, 11 2021.
Back then, CF calculated a share price of $3.95 for CRE based on 100% NAV ($/sh) of Phase I alone and using a float of 189M shares while accounting for the $8M cash in the bank.
Now as of Monday and following a close of the PP (hopefully), this calculation will be void but let’s run some numbers for the weekend.
On a P/NAV basis, Critical Elements trades at 0.3x NAV, way below other lithium developers that trade at 0.6x and producers at 0.9x – 1.6x. [
Based on comparables and using a 0.6x NAV, CF set a price target of $2.40 ($3.95 X 0.6 = $2.37)
What I missed back then is a little sheet that displayed CRE’s price per share at different tantalum and Spodumene prices.
CF’s assumption is that CRE’s projected revenues will derive at 95% from the lithium concentrates, the Rose project is most highly levered to the price of lithium. They calculated that for every 10% change in the price of lithium there is a 32% change in CRE’s target share price whereas a 10% change in the price of tantalum results in a 2.5% change in the project’s value.
The highest SC6 price on CF’s analysis is $957USD/t.
At that price which by today’s spot price sounds quite reasonable for a long term contract, especially given the fact that we are reading that url=https://www.mining.com/web/soaring-lithium-prices-spur-changes-in-supply-contracts/]soaring lithium prices spur changes in supply contracts[/url]
CRE’s share price target would be $4.42 per share including a price of a Tantalum at $150USD/Kg.
What to keep in mind is that the $4.42 per share is calculated based on 0.6x P/NAV which means that with further de-risking, 100% NAV ($/sh) would put us at $7.37 per share.
Following a production start and to push it a little further, I used a 1.5x multiplier calculation since some producers out there are worth even more, $7.37 X 1.5 would give a price of $11.05 per share..
Not bad, Eh?
I don’t mean to repeat myself by this is for Phase I alone without taking in consideration any Hydroxide production and without further exploration or expansion.
My question to management is why aren’t you using this price sensitivity test and including it in your Corporate Presentation? Your Financial Advisor has already done all the work for you! Just add a slide!
GLTA
DYDD Cheers to all longs!