NPV = US$2B 1) Paulo Misk, president and chief executive officer of Largo, stated: "Our updated mine plan contemplates a phased expansion approach to include the production of TiO2 pigment. When combined with the results from our existing vanadium production, significant free cash flow of more than $4-billion over the life of mine is forecast...."
2) Technical report indicates $2.8-billion pretax NPV (net present value) with 7-per-cent discount rate/$2-billion after-tax NPV with 7-per-cent discount rate for Largo's mining operations, using weighted average price of $8.80 per pound (lb) vanadium pentoxide (inclusive of high-purity V2O5 premium), $3,685.0 per tonne TiO2 pigment and $210.0 per tonne ilmenite.
US$2B = US$31/share (or US$2B / 64.7M shares). And this NPV comes from the base line analysis of the traditional mining operations alone. LCE was not even included in this Technical Report or National Instrument 43-101 (Standards of Disclosure for Mineral Projects)
The sp went down to C$14.71 after Management announcing their expectation of a US$2B NPV (US$31/share)? The current share prices don’t represent the value of Largo at all. Not even close.
Notes:
NPV determines the present value of an investment's future cash flows above the investment's initial cost. The discount rate discounts the future cash flows to the present-day value.The lower the discount rate the higher the NPV. A low discount rate (such as 7%) is indicative that the project is perceived as safe and secure by the people who calculate the NPV. Btw, an 8-per-cent discount rate was used in the Technical Report of 2017.
DYODD