I sent your comments to a well heeled investor in CLQ....I consider him to be smart money....I consider you the same. Here is his quick reply....
NPV I don't know about - I don't pay attention to it ever. As far as I know, the number can go all over depending on variables, and plenty of deposits with high NPV don't reflect that in the market, do they? I care about what they'll earn. Give me payback, EPS, FCF - that's what I care about.
On cost, they'll shave some with the photometric sorting, which works, and the lower strip ratio, and be back at $2800 or whatever. Doesn't that put them at or below Talison, the hard rock guys who have been in business for a long time in lower markets? And who is at $1000-1500? SQM, we think, but who else? The Argentines who were washed out this year? The Orocobres who have PEA's showing $80 million capital costs that turn into $250 million at feasibility? I dunno. The numbers often don't work out, the time lines are longer, etc.
But as he says, like gold producers making money whether at $1000 costs or at $500 costs, CLQ makes money if the price is here. So will the price remain? Demand is certainly rising - look at Talison's latest estimates (I think you'd find this in CLQ's latest presentation). But he seems to think supply will be strong. We know what the majors estimate they will do to raise production, but he must think that all the juniors will be in production by 2015, like a recent report out of CS that has major factual errors. Doubt it very much. This is mining. Or brining. Whatever - it ain't that easy. |
