RE:Fundamental ResearchSurely can do! Target price updated to 2.98CAD/share for the base case scenario
"Considering the lower risk profile of Silicon Ridge, we have lowered our cost of
capital estimate for Silicon Ridge to 8% instead of 10%. Our revised DCF valuation
is $2.98 per share versus the previous estimate of $3.20 per share.
The revised CAPEX also includes $0.81 million reserved for contingency. Excluding contingenc
y, the project’s CAPEX is just $2.7 million."
"
We do not expect any surprises as we believe the permitting process will be relatively straightforward as silica is classified as a non-metallic material, and falls under quarry guidelines." Highlights
Rogue Resources Inc. (“company”, “Rogue”) recently announced an updated Preliminary Economic Assessment on the Silicon Ridge project.
The PEA showed a 75% reduction in CAPEX to just $3.5 million. The after-tax Internal Rate of Return (“IRR”) jumped from 34% to 132%. The payback period is now under one year.
The Net Present Value (“NPV”) @ 10% estimate is $23 million, or $2.45 per share. Management is maintaining its development schedule and timeline, and expects to commence production by year-end.
Discussions with potential contract miners and off-takers are ongoing.
Management expects to receive all of the necessary permits by the summer.
RRS’s share price is down 45% YoY,
which we believe does not reflect the significant advancements made by the new management since they took over last year. On the financing part We believe the significant reduction in CAPEX further de-risks the project and enhances the probability of attaining project financing. The company has several options / avenues to fund CAPEX:
financing from contractors
debt financing from private lenders
financing from off-take partners
We also expect these financing options to be more attractive if and when a definitive offtake agreement is signed.
In the worst case scenario, management can resort to an equity financing even though they have expressed their intent to seek non-dilutive options at this time. tabman wrote: I see that Fundamental Research have just put out their latest report on RRS but I can't acccess it. Can someone help out with details.
Many thanks in advance.