Fosters Stockbroking Initiate Coverage, page-6

That's great - thanks for sharing @Accumul8

This is as conservative as you are going to get - great start. So Fosters risked valuation is .68c with 1.1B shares on issue = $751m market cap or risked $1.05 = 1.15B market cap. This is based on HPA price of USD$24,000/t and fully drawing down on GEM facility at 20c!

Some conservative standouts for me are:

* We note the company’s adopted pricing is conservative and at the low end of the observed ranges. Discussions with a broad sample of potential customers in preliminary marketing (30 separate groups) indicated the price range for 4N HPA was between US$22,000/t (China) and US$37,000/t (South Korea).

* We assume financing is drawn from a number of sources. First, we assume the existing A$80M equity facility is fully drawn, at 10% discount to the current share price. Secondly, we assume that 40% of the US$189M capex, or A$100M, is in the form of debt financing at similar terms assumed in the DFS. We assume a further equity capital requirement of A$71M for the remainder of the capex, also raised at a 10% discount to the current share price, similar to equity commitment terms. We assume a fully diluted share number of 1,100M for our valuation.

* Considerable valuation upside potential: we note further drivers of value in the Cadoux project include life extension, potential production capacity upgrade, and/or inclusion of by-product revenue, deliberately omitted by the DFS.

* FYI’s annual average EBITDA is peer leading, and also superior to A4N after accounting for price assumptions and capacity difference.

* We see a number of upcoming catalysts for FYI, including 1) FEED and FID decisions and commencement of the Cadoux HPA project; 2) customer offtake MOUs and marketing relationships; 3) updates on financing arrangements; 4) updates on the Alcoa JV; and 5) updates on LOM extension, capacity upgrade, and/or by-products.

This will be the first of many coverage reports from Fosters - with each and every report following this will be an upgrade to their recommendation.