A little bored at work so I decided to do a real quick calculation as to what I feel would be a reasonable purchase price if MMTE were to get bought out by a larger, well financed company.
A buyout is by no means a certainty but I believe based on the current share structure it would be the best way for large shareholders to realize substantial profits as there wouldn't be significant dumping in the open markets.
That being said let's take a look at the concentration levels below of lithium and potassium posted today on MMTE's website. It is important to note that these concentration levels and tonnage only account for the Salar de Maricunga concession (8,649 acres in Copiapo, Chile).
224,300 tonnes of Li; or
600,000 tonnes of Recoverable Li2CO3 (utilizing a 50% recovery factor); or
30,000 tonnes per year of Lithium Carbonate for 20 years
3,274,000 tonnes of KCl (potash); or
2,300,000 tonnes of KCl (utilizing a 70% recovery factor); or
115,000 tonnes per year of KCl for 20 years or 96% or Alfredo Requirements
So 600,000 tonnes of Recoverable Li2CO3 multiplied by a conservative $4,500 per ton (since we have a 20 year supply I imagine MMTE would negotiate a premium to current prices) equals $2.7B worth of Recoverable Li2CO3 in the Salar de Maricunga alone.
As far as potash is concerned we have 2,300,000 tonnes of Recoverable KCl multiplied by a conservative $450 per ton (since we have a 20 year supply I imagine MMTE would negotiate a premium to current prices) which equals a little over $1B woth of Recoverable KCl in the Salar de Maricunga alone.
Based on these conservative calculations we currently own lithium/potash worth ~$3.7B.
Now factor that we currently own an additional 7,166 acres in Chile which have a similar mineral/metal concentrations. Also keep in mind that we will ultimately be acquiring, at a minimum, an additional 15,000 acres. Let's assume for the sake of this rough calculation we can get another $3.7B worth of lithium/potash in this additional acreage. That would leave us with ~$7.4B worth of lithium/potash for the entire 31k acres.
I have seen in the past where many mining companies have been purchased for 10% of their in ground assets.
If we apply that buyout formula to the numbers above for MMTE we come up with a buyout price of $740M.
Divide the $740M projected buyout price by an inflated O/S of say 7.4B and you get a $0.10 per share buyout price. I will take it.
Again, I fully acknowledge there are many variables and assumptions in this calculation but we now have some more pieces of the MMTE puzzle and I think, although hypothetical, a calculation like this gives long-term investors a better idea of what MMTE may be worth in the next 6-18 months.
AI
