Focus Graphite Inc V.FMS.WT

NPV Projections 8% / SP $4-9.

[TeTsuo36]

PEA soon but I have again been looking at different scenarios including the upgrading potential.

40,000tpa production of 95%, 15,000tpa of this into upgraded production at 99.99%.

$1,500/t revenue for 95%, $300/t cost of production (i think it will be a little lower in PEA, re previous posts).

$10,000/t revenue for 99.99%, $5,000/t cost of production (on outsourced basis).

25 year NPV8 with investment of $140m in 2012/2013 and operations commencing 2014.

Ignores own plant (improved financials or no point), anode production, Kwyjibo value, Grafoid investment.

NPV $839m, SP $4.31 based on 195m shares out, capex 50% equity funded at $1

 

 

 

	Operating Cashflow & NPV	Amend as Required
		FMS	FMS
95.0%	Finished Product	40,000
95.0%	Ore Grade	15.67%
95.0%	Global Recovery	90.00%
95.0%	Ore Processed	283,628
95.0%	Ore Processed per day (365)	777
95.0%	Mill Capacity 2,500tpd	31%
95.0%	Concentrate Sold (t)	25,000
95.0%	Concentrate Upgraded (t)	15,000
95.0%	Revenue/t ($)	1,500
95.0%	Revenue ($)	37,500,000
95.0%	Royalty Rate (value t / %)	0%
95.0%	Royality (FMS %)	0
95.0%	Net Revenue	37,500,000
99.5%	Revenue/t ($)	10,000
99.5%	Revenue ($)	150,000,000
99.5%	Royalty Rate (value t / %)	0%
99.5%	Royality (FMS %)	0
99.5%	Net Revenue	150,000,000
95.0%	Operating Costs/t Concentrate ($)	300
95.0%	Operating Costs/t Ore ($)	42.31
95.0%	Operating Costs ($)	12,000,000
99.5%	Operating Cost/t Upgrading ($)	5,000
99.5%	Upgrading Costs ($)	75,000,000
	Operating Cashflow ($)	100,500,000
	Capex ($)	140,000,000
	Payback (yrs)	1.4
			NPV
	Cost of Capital (%)	8.00%	839,759,451
	Market Capitalisation Premium over NPV (%)		0%
	Market Capitalisation ($)		839,759,451
	Shares in Issue (m) (50% equity)		195
	Projected Share Price ($)		4.31
	Annual Change in Operating Cashflow (%)	0.00%
	0	-140,000,000	-140,000,000
	1	0	0
	2	100,500,000	86,162,551
	3	100,500,000	79,780,140
	4	100,500,000	73,870,500
	5	100,500,000	68,398,611
	6	100,500,000	63,332,048
	7	100,500,000	58,640,785
	8	100,500,000	54,297,023
	9	100,500,000	50,275,021
	10	100,500,000	46,550,946
	11	100,500,000	43,102,727
	12	100,500,000	39,909,933
	13	100,500,000	36,953,641
	14	100,500,000	34,216,335
	15	100,500,000	31,681,791
	16	100,500,000	29,334,992
	17	100,500,000	27,162,030
	18	100,500,000	25,150,027
	19	100,500,000	23,287,062
	20	100,500,000	21,562,095
	21	100,500,000	19,964,903
	22	100,500,000	18,486,021
	23	100,500,000	17,116,686
	24	100,500,000	15,848,783
	25	100,500,000	14,674,799

 

Now this is flat rate financials, no increase in market share or operations. The NPV gets very tasty if you introduce a 5% per annum uplift in total free cashflow:

 

 

		NPV
Cost of Capital (%)	8.00%	1,384,262,023
Market Capitalisation Premium over NPV (%)		0%
Market Capitalisation ($)		1,384,262,023
Shares in Issue (m) (50% equity)		195
Projected Share Price ($)		7.10
Annual Change in Operating Cashflow (%)	5.00%
0	-140,000,000	-140,000,000
1	0	0
2	100,500,000	86,162,551
3	105,525,000	83,769,147
4	110,801,250	81,442,226
5	116,341,313	79,179,942
6	122,158,378	76,980,500
7	128,266,297	74,842,152
8	134,679,612	72,763,204
9	141,413,592	70,742,004
10	148,484,272	68,776,948
11	155,908,486	66,866,477
12	163,703,910	65,009,075
13	171,889,105	63,203,267
14	180,483,561	61,447,621
15	189,507,739	59,740,743
16	198,983,126	58,081,278
17	208,932,282	56,467,909
18	219,378,896	54,899,356
19	230,347,841	53,374,374
20	241,865,233	51,891,752
21	253,958,495	50,450,315
22	266,656,419	49,048,917
23	279,989,240	47,686,447
24	293,988,702	46,361,824
25	308,688,137	45,073,995

 

These are my estimates and support my investment here. I make no guarantees, this is the junior market and a lot can go wrong. But this is definately worth the allocation of capital imo on a risk/reward basis.

 

Finally my ideas on own production through the Varennes plant. This is a little tenuous as there are no costings either capex or opex and no past information as a guide. My assumptions were the same production levels, but a reduced cost of 99.99% to $2,000/t. Capex in year 2 is an additional $140m for the plant, but financed fully through debt. 5% increase to operational cashflow assigned per annum. The thing is, whether it is $2,000/t, $4,000/t costs this venture is still highly profitable. The advantage comes from the grade, the benefit flows right through the value chain.

 

 

		NPV
Cost of Capital (%)	8.00%	1,847,595,943
Market Capitalisation Premium over NPV (%)		0%
Market Capitalisation ($)		1,847,595,943
Shares in Issue (m) (50% equity)		195
Projected Share Price ($)		9.47
Annual Change in Operating Cashflow (%)	5.00%
0 - Initial investment.	-140,000,000	-140,000,000
1	0	0
2 - Additional $140m capex.	5,500,000	4,715,364
3	145,500,000	115,502,591
4	152,775,000	112,294,186
5	160,413,750	109,174,903
6	168,434,438	106,142,267
7	176,856,159	103,193,870
8	185,698,967	100,327,374
9	194,983,916	97,540,502
10	204,733,111	94,831,044
11	214,969,767	92,196,848
12	225,718,255	89,635,825
13	237,004,168	87,145,941
14	248,854,377	84,725,220
15	261,297,095	82,371,742
16	274,361,950	80,083,638
17	288,080,048	77,859,092
18	302,484,050	75,696,340
19	317,608,253	73,593,664
20	333,488,665	71,549,395
21	350,163,099	69,561,912
22	367,671,253	67,629,637
23	386,054,816	65,751,036
24	405,357,557	63,924,618
25	425,625,435	62,148,934

 

DYOR/GLTA.