WHY Analysis & SP TargetFacts to justify $4/sh Price Target within 6 Months:
Phase 1a Mg Quarry Mine: 250 kt/yr (6 month operation) ... permit approval is close ... opex $30/t = $5M
$100/t sale price => $20M/a profit => NPV $100M pessimistic case starting summer 2023
$200/t sale price => $45M/a profit => NPV $270M expected case with ramp up summer 2022
$300/t sale price => 70M/a profit, NPV $400M higher case starting summer 2022
Risk factor = 1.0x once mining starts and ramps to capacity ($4/sh)
Risk factor = 0.7x once engineering is completed and contracts placed
Risk factor = 0.5x once permits received which implies Market Cap = $135M or $2/sh for the expected sales case (so this actually drives the current SP valuation near term)
Risk factor = 0.4x where we should be today for simple mining project with low risk akin to gravel quarry ($1..60/sh)
Phase 1b Gold Leaching Reclamation Project
Cost = once permit in hand EnvironGold carries the costs
$30M revenue with $6M net to WHY ... $5.5M NPV if discounted to current dollars (0.08/sh)
Phase 1c) Mg Pilot 20 tph
$20M Capex with $5M by WHY and $15M Other (based on preliminary agreements)
$6M/a ballpark net revenue = $30M NPV best estimate case if discounted to current dollars (full value is 0.45/sh and discounted for risk is would say a fair value is $.20/sh once approved and $0.10/sh pre-approved)
Phase 2a) Expansion of Mg Quarry Mine
Economics are basically Phase 1a x 4 since production is quadrupled, and realistically 2 to 3 years from revenue start
incremental NPV = $270M x 3 = $810M or $650M discounted to current dollars (roughly $8/sh)
So this will take WHY from $2/sh to $10/sh within 4 years if all goes to plan and we can avoid dilution. Other upsides probably address some dilution although I would not expect much once the mine starts up and we get past the current share raise. If I derisk using 0.2x factor pre environmental submission for gravel pit expansion implies say $1.50/sh for a current valuation.
Phase 2b) Gold Mine on Midnight Property
Free ride here ... lets see how the drilling goes but the grades are extremely high from the holes drilled previously ... probably warrants $0.20/sh at the moment in my humble opinion .. . other gold mine prospects could be farmed out or added over time to grow the asset base and diversify revenue streams.
Phase 3) Large Mg Quarry Mine + Processing Plant
NPV $800M ballpark (conservative since Co/Ni excluded and green metal prices are increasing
Risk Factor = .10x implies $80M market cap (roughly $1/sh) based on current status
Risk Factor = .30x post permit approval ($3/sh) ... no dilution required to get to this point based on other revenue streams
Risk Factor = 1.0x post start-up ($12/sh) based on current PEA in 5 to 8 years
Phase 4) Value Added Products or JVs
- free ride to some extent here depending on how far down the supply chain WHY wants to go but usually producers stop at ingots or upgraded raw materials but niche markets are likely to crop up
For those who feel I am being too optimistic then please divide my discounted and derisked number by 2. You still get 10x upside from here. The SP is disconnected from reality and it will just take a few savvy investors to come to that understanding. I have loaded up ... well might double down again after this post ... but will be happy it is goes parabolic in the coming days or weeks or months. The value will be delivered ... what I do not know is when the market will reward the shareholders who hang tight. I am sure an analyst will do a great analysis and then reconcilde a price target just above the current SP, but the above is my own analysis.
Now you now know why I am excited enough to post on SH to help others understand this investment. I guess I am glad I did not hear about them 10 years ago since I would have invested then. Actually it is quite ridiculous that one can hop on board at this market cap ... the PP investors will do well ... and we basically need them to get to the next stop.
Near term risk is the PP does not successfully conclude. If so the SP will languish for a few months until the company regroups and raises the necessary cash to finish off the mine permit and go on a virtual road show to get the story out to a broad audience. Given the low market cap it will not take a lot to move the SP up. :-)
GLTA