While we are waiting... an estimated NPVAfter all the information disclosed during and after the AGM, I wonder if the NPV would change a lot because the project having now two phases. Take notice that this analysis is only an estimation...
I made new calculations of phases 1 and 2 for two levels of Ltithium Carbonate Equivalent (LCE) selling price (12,000 US / t and 10,000 US / t) (mostly probable LCE selling price in the BFS) and for two levels of interest rates for actualization of value (10% and 12%) (higher interest rates than in the PEA, which at 8% I beleive too low), based on the following assumptions:
Phase 1 assumptions and results:
1- Exchange rate of 20% between US and CDN dollars.
2- Production of Lithium Spodumene grade Technical (LST) fixed at 70% of the production since the average level of purity for the Spodumene of the Rose project is 0.14%, which is well below the 0.2% required for the LST. Accordingly, the Lithium Spodumene grade Chemical (LSC) represents 30% of production of phase 1.
3- Based on a fix cost of 2,000 $US / t and 40% (lower OPEX for the LST compared to production of Lithium Carbonate (LC)) of the variable cost of 2,900 $US / t, I calculated a cost of 3,160 $US / t for production of LCE, that is 475 $CDN / t of LST, since it takes 8 tons fo LST to produce one ton of LCE. (I think I heard some 390 $US / t of LST for cost rpoduction while I was at the AGM, which would fit well with my estimate.)
4- Production of 26,600 t of LCE per year for phase 1. However, because of ramp up the first year the production woul be 60% of that number.
5- LSC selling price is fixed at 1000 $US / t.
6- A mine life time of 20 years (instead of 17 years in the PEA), based on the addition of the Helico South results (rough estimation).
Accordingly, for a LCE selling price of 12,000 $US / t, the profit per year is 197.38 M $CDN for the LST and 46.28 M $CDN for the LSC, for a total profit of 243.6 M $CDN. For a LCE selling price of 10,000 $US / t, the profit per year is 152.68 M $CDN for the LST and 46.28 M $CDN for the LSC, for a total profit of 198.9 M $CDN. And the NPVs for the phase 1 are : (more than I expected)
For LCE selling price of 12,000 US / t LCE
10 % interest rate : 1.985 B $CDN
12% interest rate: 1.732 B $CDN
For LCE selling price of 10,000 US / t LCE
10 % interest rate : 1.621 B $CDN
12% interest rate: 1.415 B $CDN
Phase 2 assumptions and results:
1- Exchange rate of 20% between US and CDN dollars.
2- Since only the production of LSC, which represents 30% of production of phase 1, is transformed into LC in phase 2, and that LSC production is equivalent to 7,980 tons of LC, I assumed that CRE would buy the remaining LSC on the market (at market price) to get the plant to produce 26600 tons of LCE. Accordingly, I assumed a fixed cost of 1,000 $US / t of LSC as cost per ton.
3- Production of 26,600 t of LCE per year for phase 2. However, because of ramp up the first year the production woul be 60% of that number.
4- A mine life time of 20 years (instead of 17 years in the PEA), based on the addition of the Helico South results (rough estimation).
Accordingly, for a LCE selling price of 12,000 $US / t, the total profit per year is 127.68 M $CDN. For a LCE selling price of 10,000 $US / t, the total profit per year is 63.84 M $CDN . And the NPVs for the phase 2 are :
For LCE selling price of 12,000 US / t LCE
10 % interest rate : 1.040 B $CDN
12% interest rate: 0.908 B $CDN
For LCE selling price of 10,000 US / t LCE
10 % interest rate : 0.520 B $CDN
12% interest rate: 0.454 B $CDN.
The total NPVs for Phase 1 and 2 are :
For LCE selling price of 12,000 US / t LCE
10 % interest rate : 3.026 B $CDN
12% interest rate: 2.640 B $CDN
For LCE selling price of 10,000 US / t LCE
10 % interest rate : 2.141 B $CDN
12% interest rate: 1.869 B $CDN.
If we take the lowest NPV and divide it by the expected number of shares after dilution, that is 250 M shares, we get a SP of 7.50 $. Accounting for the remaining risk after the BFS release, we have an expected SP of 3.50 $ to 3.75 $ within a few months (that is, if the market reacts correctly).
Enjoy.
JMHO
PADAP23