I think it's a bit early for both EARS and CS to be in the valuation model. Just my opinion, and based largely on my understanding that the current 3ktpa plant is just a demo plant. If it's more than a demo plant, then .....
APG's time line suggests the first EARS plant mid 2009, and the 60ktpa plant around Mar 2010. BHP are not expecting CS phase 1 to be producing and operational until 2011 or 2012. Note the 'fit' in timelines. Nice. Very nice :)
I would be plugging in CS when APG finishes processing the 550 tonnes of sand to BHP's satisfaction in March next year. And I'd be plugging it in with a 100% probability because I believe at that stage any show-stoppers will have been overcome. To my mind the 20X scale-up to the 60ktpa plant will be a given. I'm not trying to trivialise or minimise scale-up problems - they'll be there, but the will to overcome them and the combined abilities of APG and BHP engineers will see them through. Any skill/experience gap will be brought. $$$ won't be a problem. Might see an over-run on time frames depending on the types of stopper/blockers they run into, but I'm confident that they'll get there.
I think I'd probably input EARS into the valuation model around mid-next year. But I hesitate because if we assume that the 550 tonnes of sand have been successfully processed, then what's the probability that the APG people and resources needed for the EARS plant are the same or similar to those needed for the 60 ktpa plant? If you've got a resource conflict at that stage, you'd have to give priority to the 60ktpa plant wouldn't you?
Worth thinking about? cheers Lekki
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