As we roll on to the final weeks of the year, Galan Lithium Ltd (ASX: GLN) shareholders are enjoying the gains of their Christmas stock-ings in the minerals company.
Shares are up 15% in the last month and have climbed off a low of 92 cents back in October to now trade at $1.72 apiece.
Two catalysts early in December helped give the Galan Lithium share price an additional boost to its new 52-week highs recently. Not to mention the price of lithium continues to climb to new all-time highs on a repeated basis. Here are the details.
What’s got the Galan Lithium share price racing higher?
Early in December, the company detailed its economic assessment of its Hombre Muerto West Project, located in Argentina.
As reported by The Motley Fool at the time, Galan upgraded the net present value (NPV) of the project by a staggering 120% to US$2.2 billion ($3.1 billion at the current exchange rate).
Galan Lithium also bumped its annual EBITDA projections by 65% to US$287 million. Each of the inputs was assigned using a lithium price of US$18,594 per tonne.
The upgrades do a great deal for Galan’s share price valuation when factoring in a sum-of-the-parts style analysis, often employed by analysts in stock valuations.
Taking the adjusted NPV valuation of $2.2 billion and dividing it by Galan’s fully diluted share count gives a $7.30 per share valuation for the project. Depending on what weight analysts and/or the company assign to this revenue segment, the project may or may not build in a premium to Galan’s share price valuation.
Afterward this announcement, the company gave another update on its Hombre Muerto project, advising a feasibility study tender on the site was completed.
Galan also advised that the next stage of the project is expected to be delivered late in the fourth quarter of 2022.
Seeing as the price of Lithium has soared over 17% to new all-time highs once again since December, it also appears the ASX lithium basket is set to fare well in response to this.
Lithium has also climbed more than 74% this year to date and is showing considerable strength amid heightened demand for the material in a number of electrical applications.
Galan share price summary
Galan shares have been an outstanding performer these past 12 months and have climbed 453% in that time.
Year to date Galan shares have soared another 345%.
The post Why is the Galan Lithium (ASX:GLN) share price having such a happy Christmas? appeared first on The Motley Fool Australia.
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The author has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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