Following on from an earlier note about whether a commodity can sustain current pricing long enough to make the whole thing worthwhile for the underlying producer (e.g. to justify the market cap) consider below one of the lithium plays, AKE.
Firstly, note sales, a function of presently high lithium pricing.
And note the earnings forecast.
They absolutely need present pricing to continue.
Some of these companies are being valued on discounted cashflow analysis of resources they’ve not even discovered, let alone begun production at.
Whilst the sector is exciting, it is not one for us.
Elon will need aluminium to sell his cars, and AWC is well-positioned in that regard, with a low valuation, high yield, and solid cost curve positioning.
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