Wednesday, May 29, 2024


Dhaka Tribune

Atlantic Lithium’s Ewoyaa Project looks very, very, profitable indeed

Assuming, of course, that they keep their licences after Blue Orca’s allegations

Update : 29 Jun 2023, 02:28 PM

Atlantic Lithium (LON: ALL) has just released the Definitive Feasibility Study, DFS, for its Ewoyaa lithium project in Ghana. The DFS is, well, it's definitive. This is the best guess, backed by all the documentation that can be had, as to what will actually happen at a mining operation. How much of the target mineral there is, how it will be mined, how processed, transported, sold, the price at which it will be sold, everything. This is also the last stage of the process before actually going and building the mine and processing plant. If the numbers look right here then finance won't be a problem - banks will line up to lend etc.  

Atlantic Lithium does have the one potential problem, those allegations from Blue Orca: “Blue Orca's claim is that the mining licences in Ghana were obtained by the illegal deployment of cash and brown envelope payments. They are therefore unlikely to stand and Atlantic, and therefore Piedmont, are out of luck. Of course, the idea of bribery in West Africa brings to mind Captain Renault, we're all shocked, shocked. Now, whether this is all true is another matter. Blue Orca seem pretty firm in their statements, but there is that large hole in there. Not only do the allegations have to be true the mining licences also need to be at risk as a result of that being true. It's not obvious that it is true and further, not obvious that the licences would be at risk if it were. West Africa is, after all, West Africa. “

No, we don't know either, so that's just there as information about what is alleged.

Atlantic Lithium share price from London Stock Exchange

The DFS is here. The surprise, to us, is that ALL shares have fallen upon this publication. Because by the numbers shown Ewoyaa is wildly, hugely, profitable. Yes, we know, we've muttered about how we don't expect the lithium price to hold up and all that. So much supply is to come to market that the price will inevitably revert to long term averages and so on. But the surprise, to us at least, is how conservative Atlantic Lithium is being about that future price. 

The DFS does show that Eqoyaa will make back its capital quickly (19 months perhaps) and so on. But this is at a price assumption, of: SC6 Sell Price, LOM Average, FOB Ghana

US$/t 1,695. And the CIF China price today is “Spodumene Concentrate(6%,CIF China) Price, USD/mt 4,030. Yes, that is USD. And no, it really doesn't take $2,400 a tonne to ship from Ghana to China. Something more like $24 is more correct.

Yes, it's also true that Atlantic must sell 50% of production to Piedmont at an offtake contract price determined in the investment agreement. But even so, they are being very conservative about near term lithium prices. 

The lack of reaction to this DFS is such that in fact we're worried about what we've missed here. That mine looks like it's worth much more than the ALL market capitalisation - so what is it that we've missed?  

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