Post by
555rookie555 on Jan 27, 2021 10:46am
Future value
I'm a rookie at this but my layman valuation is below: Reward: Today's value/cap: .28/$115M Based on Jan 25, 2021 presentation, operational refinery will generate $35M per year cash. Assume future P/E of 10: $35M x 10 = $350M / $115M = about 3x today's value = $.84 per share. Future P/E of 15: =$35M x 15 = $525M/$115M (today's value) = 4.5x * .28 = $1.28 per share. Riotinto PE is around 20 currently, Barricks is around 12, some junior mining companies hover around 10 (for the ones I'm watching). The $35M per year cash flow is based on feedstock from Glencore and does not assume First Cobalt mining it's own ore... Operational costs in the long run will drop drastically freeing up another $35M per year I suspect (but again I'm a layman). Risk: Current risk is dilution of shares to finance remainder of refinery if banks say no but junior mines get bank financing so why not FCC? Environmental risk next to nill since fed and provincial government supported project with $10M, market is growing so sales should be fine... EV manufacturers planning on eliminating cobalt will have unproven product and likely won't last as long (number of recharges, distance between charges, temperature and charge rate of battery, etc.). Premium EV manufacturers will likely be using cobalt in batteries still so market risk not high. Conclusion: I will be holding my position of $25k. Based on leadership team and Ausenco engineering's global experience, Glencore's experience and support, I view financing and construction risks as acceptable for the gains of 3 to 4.5x within 24 months, then opportunity for another 4x if FCC supplies own feedstock/lowers op costs, etc. $25k today, potential $150k to $450k by 2030.
Comment by
Jeepfan on Jan 27, 2021 10:51am
Rookie yeah right maybe not so much
Comment by
RudeyT on Jan 27, 2021 12:08pm
There's an argument to be made that perhaps in the future First Cobalt will be regarded more as an EV / green tech company rather than a miner... If this is the case, this industry is priced much higher than 10x PE... However, I do prefer a more conservative estimate like you suggest.. Also a rookie, but we gotta build credibility somehow!
Comment by
WernerD on Jan 27, 2021 2:39pm
It's rate for anyone to do a good job here. Thanks for sharing your review.
Comment by
Mazz45 on Jan 27, 2021 5:32pm
Good summary on some simple math. You also could start factoring in someone of the recent silver assets and potential, cobalt properties they will start drilling in the spring, future battery recycling. lots more upside for sure but with the recent developments, I believe the risk is very very low. Enough for me to actually increase my position recently.