Comparison.... Based on talk of the potential sale of our company, I made a rough comparison relative to project purchase costs plus project development cost and then compared with the potential project annual sales.
The company used to compare with ENZR has Reserves and presently is in production, so we must be aware that Energizer presently hasn't reserves and is not yet in production, but our present resources are at surface, easily mined and convertable to Reserves
The company in the comparison is Sherritt International, that in June of 2007, paid $4.88 per share for 313.3 million shares of Dynatec to obtain its 40% interest in the Ambatovy Nickel Project that was then not yet in production.
Sherrit paid Dynatec approximately $1.50 billion for its 40% interest and was further responsible for 40% of the approximate $5.5 billion costs required to build Ambatovy which amounted to another $2.2 billion or approximately $3.7 billion well before before actual production.
Ambatovy in which Sherritt has it's 40% is capable of producing 60,000 tonne of Nickel and 5,600 tonne Cobalt annually.
Checking sales value based on the above metal prices over this past year average roughly $8/lb for Nickel and $12 for Cobalt and would give Sherritt sales from Ambatovy of:
60,000 x 0.4 x 2204.6 x $8.0 + 5,600 x 0.40 x 2204.6 x $12, or about $482.5 million annually over 27 years, based on Sherrit's 40% interest, before considering lesser minerals.
After rounding Sherritts potential annual sales to $500 million on which Sherritt payed $3.7B or 3.7/0.50 or 7.4 times potential annual sales.
In other words Sherritt paid 1.5/0.50, or 3.0 times the potential annual sales value to obtain its 40% interest in the project and then another 2.2/0.50, 4.4 times the potential annual sales to develop its interests
Actual nickel prices were much higher during 2007 than presently and may go higher again. The same can be said for graphite prices, especially considering its many uses (both old and new), before including the potential for battery grade V2O5, whose price can be compared with nickel.
Before considering the 75% JV building the Molo mine would cost $162.04 million to produce 84,000 tonne graphite of various graphite giving sales of $168 million annually, but we must note that the recent PEA didn't include per tonne prices for both Large and Jumbo flake.
If Molo's Large and Jumbo flake were included in the PEA, the average sales price per tonne material would be about $2000/tonne, so initial graphite sales based on 84,000 tonne would be 84,000 x 2000, or $168 million at the mine development costs of $162 million, or roughly 1x product sales, or when compared to the Dynatec Sherritt basis at 1/7.4 be 13.5%. In a ENZR to potential buyer comparison a sale of Molo alone might go for (168/0.135)0.75. or 933 million based on its 75% JV interests.
IF a buyer planned to put Molo in at at 150,000 tonne annually sales would be $300M, at a plant cost of (150/84)162, or $289.3 million and a potential sales price of (300/0.135)0.75, or $1.67 billion for Molo alone on the JV basis.
If consideration were given to our 100% owned Vanadium Mine with potential production of 34.6M pounds of battery grade V2O5 annually from a 7,500 TPD operation that could cost from $350 million to $500 million to construct - battery grade V2O5 prices should be higher than nickel prices – and using $15 per pound of battery grade V2O5, its potential annual sales could be in the neighborhood of ~$520 million, which together with potential graphite sales of $300 million at 150,000 tonne would come to $820 million (which is higher than Sherritts sales at Ambatovy) at a total plant cost for both minerals from $639 to $789 million.
So shareholders should each figure what a fair sales price for both the Molo and the Green Giant Mine should be if a buyout offer were to come.
The other partners in Ambatovy are Sumitomo, 27.5% and Korea resources Corporation, 27.5% and SNC Lavelin's 5%.
Sherritt might have bought or may buy SNC Lavelin's 5% interest in Ambatovy.