Critical Elements Lithium Corp V.CRE

Price Target from Eight Capital

[Matteo01]

I read the report from Eight Capital and find the $2.00 target to be too low.

The analyst used a discount rate of 9% instead of the 8% used in the feasibility study released in 2017.

He also applied a 15% discount to the NAV. The NPV used in his calculations is $462M (instead of the $723M after tax NPV from the feasibility study).

I noticed the analyst mixed up the prices for the chemical and technical grade spodumene in the report. On page 16 he says the price of chemical grade spodumene is $900/T and the technical grade is $750/T. On page 17 in Figure 1 the price of the 5% chemical grade is $750/T and the 6% technical grade is $900/T.

CRE used prices of $750/T for the chemical grade spodumene and $1,500/T for the technical grade spodumene in the 2017 FS. The technical grade has a much higher value than the chemical grade from what we’ve been told by management over the years.

The after tax IRR in the report is 23% compared to the 34.9% in the FS.

Piedmont is using a value of $900/T as a long term price for spodumene in their updated FS released last week. If CRE had the FS revised using updated long term prices we would have a much higher NPV, maybe closer to $1B after tax. Pilbara got $2,350/T in their last auction for 10,000 tons of 5.5% spodumene concentrate. I understand we can't use this as a long term price, but just shows there is room to the upside.


Matteo01

[blaggers]

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[Matteo01]

Thanks Blaggers! To all the longs, Merry Christmas and best wishes for the New Year! Matteo01