GLOBAL LITHIUM MARKET

Transcription

1 PC WONG

2 DISCLAIMER The views by the author are his alone. All opinions expressed by the author are subject to change. The viewer is not to assume the performance of any company shares will equal its past performance. Use of information contained in this presentation does not constitute any contractual relationship between the viewer and the author. The author hereby disclaims all responsibilities and liabilities for any use of information contained in this presentation. The author s risk assessment may differ from the viewer's. Risks are subject to economic uncertainties and market conditions. Viewers are advised to exercise due diligence and do their own assessment of the risks involved when investing in any company. Viewers shall not hold the author liable for investments which have gone sour. You are encouraged to seek the opinion of a financial advisor.

3 Image Source: and GLOBAL LITHIUM MARKET

4 LITHIUM PRICE CHART Image Source:

5 GLOBAL DEMAND FOR LITHIUM Image Source:

6 ASIA TO DRIVE LITHIUM DEMAND BY 2020 Image Source:

7 LITHIUM DEMAND FROM VEHICLES EV HEV PIEV Electric Vehicle Hybrid Electric Vehicle Plug In Electric Vehicle Image Source:

8 CO2 EMISSION STANDARDS Stricter CO2 emission standards to drive demand for EVs, HEVs and PIEVs Image Source:

9 IFS ASSESSMENT: WHY LITHIUM Lithium demand set to surge from 190 kt (kilotonne) in 2015 to 340 kt in 2020 the equivalent of 78.9% increase Source: The lead-acid batteries will have the bigger share of the market but the growth is stalling. Lead-acid batteries market share grew from US$30B in 2010 to US$40B in 2015, the equivalent of 30.5% growth Lithium-ion batteries market grew from US$11B in 2010 to US$24B in 2015, the equivalent of 118.2% growth The main driver for the next phase of growth will be EVs, HEVs and PIEVs Avicienne, a global battery consultant, pack costs for electric vehicles declined from $500KWh in 2014 to under $400 KWh in May reach $270 KWh by Will mirror the lithium-ion battery evolution in cell phones German Parliament signed into law forbidding combustion engine by years from now

10 Image Source: Galaxy Resources website GALAXY RESOURCES

11 GALAXY RESOURCES Listed on the ASX under code GXY. Singular unit Listed on the US OTCMKTS under code GALXF. Singular unit Global lithium company with assets in Australia, Canada and Argentina Advancing plans to develop the Sal de Vida Lithium and Potash Brine Project in Argentina Sal de Vida is in the Lithium Triangle, a region where Chile, Argentina and Bolivia meet which accounts for 60% of global lithium production Sal de Vida is a proven high quality resource has excellent promise as a future low cost production facility. Also owns the Mt Cattlin Spodumene Mine near Ravensthorpe in Western Australia and the James Bay Lithium Pegmatite Project in Quebec, Canada

12 LOCATIONS James Bay Lithium Pegmatite Project - Canada Sal de Vida - Argentina Mt Cattlin Spodumene Mine - Western Australia Image Source: Galaxy Resources website

13 LITHIUM TRIANGLE: SAL DE VIDA MINE Image Source: Galaxy Resources website Measured and Indicated Resource 4.053M tonnes of Lithium Carbonate M tonnes of Potassium Chloride Inferred Resource 3.180M tonnes of Lithium Carbonate M tonnes of Potassium Chloride Total Resource 7.233m tonnes of Lithium Carbonate M tonnes of Potassium Chloride

14 SUMMARY OF FINANCIALS H Revenue A$27,937 in 2016 vs A$67,738 in 0215 Net Profit A$70.350M in 2016 vs A$55.014M in 2015 Current Assets A$20.154M Non Current Assets AS$ M Total Assets A$ M Current Liabilities A$15.714M Non Current Liabilities A$31.634M Total Liabilities A$47.348M Total Equity A$ M

15 BENCHMARK AGAINST KPIs Actual KPI Revenue Growth -58.8% +5% Net Profit Growth +27.9% +10% Current Ratio 1.28 >1.0 Debt to Equity Ratio 0.27 <1.5 Payback Period 0.41 yrs <5.0 yrs Dividend Yield (based on A$0.305) 0.0% 7.5% NAVPS A$0.14 SP/NAVPS 2.17x <3x

16 KEY TAKEWAYS 1 Revenue is negligible Net Profit rose due to write back No real income from mine operations as yet Balance sheet is good with very low debt Cash at hand of A$12.785M Upgrading of Mt Cattlin Project - Wet commissioning of the feed classification circuit implemented on schedule - Critical path item of piping and electrical installation remains on track - Over 70kt of crushed ore has been stockpiled in preparation for ore commissioning - Target to start production in November 2016

17 KEY TAKEWAYS 2 Sal de Vida remains the prized asset. Its deposit is one of the world s largest and highest quality undeveloped lithium brine deposits with significant expansion potential Completed a Definitive Feasibility Study which highlighted the following: Pre-tax NPV of US$645M (US$380M post tax) at 10% discount rate Potential to generate total annual revenues in the region of US$215M Operating cash flow before interest and tax of US$118M per annum Initial capital investment limited to US$100M with output of saleable product within two years of construction commencing Development options to consider modular designs, providing the flexibility to add units and scale up the capacity to 25,000 tonnes per year of lithium carbonate and 95,000 tonnes of potassium chloride.

18 SHARE PRICE PERFORMANCE Chart Source: Morningstar 52 Week Low of A$0.04 and 52 Week High of A$0.58 Current price of A$0.305 is 47.4% off its 52 Week High

19 EVENTS WHICH COULD IMPACT THE STOCK NEGATIVELY Oversupply of lithium in the market as production is ramped up worldwide Global recession which could impact the demand for lithium Shares dilution or extensive debt to kick start production

20 IFS ASSESSEMENT: ANALYSTS RESEARCH Bell Potter: Doubt the actual amount of new lithium production will be as large as expected because of the remoteness of many deposits, long lead times, the need for production expertise and product qualification, and market forces. Sees the new lithium production pipeline being smaller and therefore better able to be absorbed by the market Target Price A$0.58 Baillieu Holst The project pipeline - Production from Mt Cattlin in Q4 2016; Sal de Vida demo plant producing in late 2018; potentially James Bay spodumene in late 2019; and then full production from Sal de Vida in late 2021 Canaccord Price target: A$0.50

21 IFS ASSESSMENT TRADING BUY. The production of Mt Cattlin will boost the price. So too will any positive update on Sal de Vida Recommended to take profit when Mt Cattlin operations begins in earnest Not recommended for long term holding unless Mt Cattlin delivers positive cash flow from operating activities For ASX, not recommended to buy above A$0.33 For OTCMKTS would not recommend buying above US$0.25 High risk. Non revenue generating as yet Syariah compliant as at 8 October, 2016

22 Image Source: International Lithium Corp website INTERNATIONAL LITHIUM CORP

23 INTERNATIONAL LITHIUM CORP Listed on the TSX (Toronto Exchange) under code ILC. 500 shares per order Listed on the US OTCMKT under code ILHMF. Singular unit 21.18% owned by TNR Gold Corp 15.00% stake by Jiangxi Ganfeng Lithium Co Ltd (GFL) from China which is one of the world s leading lithium producers. It s production totals 1,000M tonnes of lithium metal a year with a new facility adding another 500M tonnes a year upon completion Global lithium resource in Argentine, Canada and Ireland Primary focus is the Mariana lithium-potash brine project in Argentina with a total area of 160 sq km. It is located in South America s rich lithium belt which produces 70% of global production

24 GLOBAL LITHIUM PROJECTS Mariana Project, Argentina Commodities: Potassium, Lithium and Boron Mavis Project, Ontario Raleigh Project, Ontario Avalonia Project, Ireland Ownership: 80% GFL, 20% ILC. ILC retains 10% backin right Commodities: Lithium, Cesium Ownership: 100% ownership Commodities: Lithium, Tantalum Ownership: 100% ownership Commodities: Lithium Ownership: 51% owned by GFL, up to 75% upon successful completion of $10M option

25 PROJECT LOCATIONS Image Source: International Lithium Corp website

26 SUMMARY OF FINANCIALS H Revenue NIL Net Loss -CAD451,511 in 2016 vs -CAD302,548 in 2015 Current Assets CAD1.225M Non Current Assets CAD4.978M Total Assets CAD6.203M Current Liabilities CAD0.745M Non Current Liabilities CAD2.186M Total Liabilities CAD2.931M Total Equity CAD3.272M

27 BENCHMARK AGAINST KPIs Actual KPI Revenue Growth 0.0% +5% Net Profit Growth -49.2% +10% Current Ratio 1.64 >1.0 Debt to Equity Ratio 0.90 <1.5 Payback Period 0 <5.0 years Distribution Yield (based on CAD0.18) 0.% 7.5% NAVPS CAD0.04 SP/NAVPS 4.25x <3x

28 KEY TAKEWAYS 1 The company has narrowed its loss but the amount is insignificant Company has yet to generate revenue and profit from operating activities The balance sheet meets the KPIs but the prospect of further debt and dilution remains possible in the near term as the company embarks on production Company has strategic partnership with GFL which could hasten its exploration and production activities

29 KEY TAKEWAYS 2 Strategic partnership with Pioneer Resources in exploration of Mavis and Raleigh Lithium Pegmatite Projects, Ontario, Canada. Now expanded to cover 640 hectares Partnering with GFL in exploration at the Avalonia Lithium Project, Ireland GFL and ILC approve US$12M budget to accelerate the Mariana Lithium Brine Project in Argentina

30 SHARE PRICE PERFORMANCE Chart Source: Morningstar 52 Week Low of CAD0.05 and 52 Week High of CAD0.38 Current price of CAD0.18 is 52.6% off its 52 week high of CAD0.38

31 EVENTS WHICH COULD IMPACT THE STOCK NEGATIVELY Oversupply of lithium in the market as production is ramped up worldwide Global recession which could impact the demand for lithium Shares dilution or extensive debt to kick start production however this is mitigated by the presence of GFL as a stakeholder

32 IFS ASSESSMENT TRADING BUY. Very young company with strong partner in GFL Recommended to take profit when drilling results reveal massive deposits or when lithium price trends upwards For TSX market would not recommend buying above CAD0.18 For OTCMKT would not recommend buying above US$0.135 Look out for announcement of drill results or resource level which could spike the share price at which it is prudent to exit High risk as it is a junior explorer. Non revenue generating. Not rated by Ideal Ratings

33 I do not own shares of GXY or ILC MY DISCLOSURE

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35 HAPPY INVESTING! THANK YOU All rights reserved by Jupiter Consultancy Sdn Bhd. Any unauthorised copying is deemed an infringement under the Malaysian Copyright Act 1987