Tawana is still a compelling buy after the recent surge. Based on current projections on Baldhill by Canaccord, we have these astounding investing metrics -
Current (conservative) base case NPV is at 78c per share
Free Cash Flow (FCF) yield on current price is an astounding 24%
IRR of 185%, payback within 12 months
For investors, just focus on these risks. Operating risk is well mitigated - quality of management, lithium off-take agreement, production plans on schedule and project feasibility. Financial risk appears to be fully mitigated too based on Canaccord’s financial projections and that project funding is fully secured.
So this makes a simple case to invest (or to add further) in Tawana at current SP.
I have mentioned on number of instances that I intend to hold Tawana at least for the medium term (3 years). This time-frame will allow for the full earnings flow of Baldhill. If feasible, during this period, the company can also fast start the Cowan project (this is a huge hidden value for Tawana shareholders).
However, there is one risk that I am wary about, i.e. the state of lithium industry. This is a macro industry risk (that leads to boom, bust situation) – that is beyond our control and has to be closely monitored.
I find it amusing for stake-holders frequently lamenting about the current SP (not reflecting the true value of Baldhill) and getting rather impatient. It is a case of perception against reality; traders against value investors. If you believe in Baldhill project, then stay the course. From my experience, value investors will always trump on a longer term basis. Patience is the key.
I quote a popular investing adage “investing requires you to look at the season, not the weather”. Remember this line.
TAW Price at posting:
35.0¢ Sentiment: Hold Disclosure: Held
