Wesfarmers Limited

ASX:WES

Wesfarmers Limited

ASX:WES
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$71.83 (+3.3%)
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#146
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Reports (4) My Report Forum Investors
Forum Topics WES WES Future Returns on Lithium

Pinned straw:
Byrnesty
Added one year ago

Wesfarmers released some impressive FY23 results last week.

Revenue up 18%. NPAT up 4.8%. All in a subdued retail trading environment.

Some really interesting discussion followed the results presentation regarding the Mt Holland project. I have outlined the timeline of events as per the discussion:

FY24

Commissioning and ramp up of concentrator Oct/Nov 2023.

Produce 50,000t (WES share) spodumene concentrate in FY24

FY25

Produce 190,000t (WES share) spodumene.

Commission hydroxide refinery late CY24.

Lithium hydroxide available for sale by early to mid CY25.

FY26

Lithium hydroxide refining.

Based on the above timeline, my take on the future revenues is outlined below. I am no lithium expert so please correct me if the numbers are horribly wrong.

FY24

50,000t x $4,000/t (net margin) = $200M

FY25

190,000t x $4,000/t (net margin) = $760M.

FY26

8t spodumene produces 1t lithium hydroxide, therefore

190,000t/8 = 23,750t lithium hydroxide x ($50,000/t - $7,000/t) $43,000/t net margin = $1B.

The lithium operation has the potential to increase profits by 40% in FY26.

I remember Ben Clark (TMS Capital) saying that the market is not pricing the lithium operation into the WES share price.

Based on this I would have to agree.

Lithium experts please feel free to rip this apart.
edgescape
Added one year ago

Should also factor in that ownership is split 50:50 between SQM and WES

Also not close to main roads. I think this was what was holding up the development which was mentioned by someone here. That distance to Perth looks like about 600km.

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There is gold there though. Whether it will be mined is another story. My original investment thesis for buying Kidman before the takeover was the Gold project at that time.

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I don't know the geology of the project. But with SQM as JV it should be fine.

As an aside, someone here was hoping for a meaningful correction in Wesfarmers.

Well I just bought an office desk and chair from Officeworks and both are pretty good. Doesn't look like we'll get that correction soon :)


8
west
Added one year ago

@edgescape that was me ????

best chance is to see I can pick up a parcel ex div

6
edgescape
Added one year ago

Same boat as you - I think I've missed a few opportunities to jump in.

5