Foran Capex - AMC implicationForan is about to start construction of a 4900 tonne/day operation in N. Saskatchewan. From Scotia's comment this morning, "...Foran provided an updated capex estimate of US$604 M for Phase 1... Including funds spent to date which we estimate at ~$150 M, total upfront capex is ~US$712 M (or $988M vs. ~$370 million in the 2022 feasibility study)."
Scotia notes that some unspecified amount of the Phase 2 capex is embedded within the above numbers. Commercial declaration of production is scheduled for Q2 2026.
From what I can see, AMC is likely planning a similar-sized operation so I will assume ballpark US$700 million capex in 2024 dollars. If AMC can get by with 30% equity and a 70% combination of debt and streaming, they will have to raise US$210 million or Cdn$283 million at $1.35 exchange rate. At a 6% underwriting fee, the number rises to Cdn$300 million.
If we estimate they can issue shares at maybe $2.50 per that's still 120 million new shares. Which means shares outstanding will increase from about 120 million today to about 240 million after capex financing, ignoring option dilution.
From the Sept. 16 Clarus report: "Our 12-month target price is based on a 0.5X multiple to our estimated fully-funded project NAV (5%) for Kay." Their target is $10.
I have no no clue how these analyst models work. WITHOUT financing dilution Clarus sees AMC being worth ~Cdn$1.2 Billion. If you build in some reasonable estimate of financing, which I have tried to do, double that. Of course there's little likelihood that this financing will happen in the next year. My guess would be 3 years from now. Repeat: guess. Still and all, I think that $10 target is ridiculous.