General Discussions, page-1449

For those who want background information around valuations, graphite demand, what graphite is, graphite in battery types etc refer - Post #: 55038580 Lots of posts in that post on what RNU is all about.

The latest presentation is interesting and more bullish on EV demand - not surprising, you just have to look at what is happening in lithium stocks to see that. I think the market is also finally waking up that you need 1kg graphite in the anode of a battery (NCA and NCM which are the predominant battery types going forward) per kWh, and just for comparison would need 0.9 kg lithium carbonate equivalent per kWh if want to compare to lithium. And that is the market is waking up that you need more than just lithium in EVs, finally, which bodes well for graphite resources held outside China, like RNU's deposit. And obviously the other commodities that go into EVs as well (like rare earths for example, copper etc etc)

Stage 1 as assumed in these latest threads - as per from latest presentation - is essentially what I modelled in post Post #: 51583221, so to understand below for posters this embedded post is the base post. The base post uses RNUs conversions to A$ to get impacts on potential SP. Expanding production above 28,000t is simply going to make the economics better is the point.



To compare above to earlier versions, noting that data was in both US$ and A$, you can see essentially the latest presentation is the same as the last studies around PSG. Will be interesting if the updated studies will change any of the variables below like price for example. Anyway, ultimately hitting milestones in production does have an element of luck in that variables/outcomes can change, but if the variables and project comes in as scoped then there is a lot to like here (hence the risk reward equation for long term holders here).



2 billion shares:




2.5 billion shares


3 billion shares


Just to make a key point here. The above is EBIT/DA based, so interest payments are below the EBIT/DA line. Now, the more shares on issue means the more likely the debt funding will be lower. Notwithstanding, when signing offtakes there are other methods of getting finance such as prepayments as well, or even the offtaker getting an equity stake itself for capex. The latter does add to shares on issue, so above deals with that, while the former reduces shares on issue but in prepayment arrangements does also mean the price you receive becomes slightly lower than market prices for that prepayment incentive. So in effect impact can balance itself. Equity for offtakes though gives market confidence project is going to production and therefore the move from NPV metrics on SP to nominal P/E ratios is faster in my opinion prior to production starting is the point.

Given SP movements, seems too me the market is starting to switch from a viewpoint of SP based on NPV, to one where the market feels RNU will get to production and therefore is starting to tinker with switching to nominal metrics (or another way to put it a form of combination of NPV and EBIT/DA evaluations in transition to production, whereas in production it is all about nominal metrics associated with (future) profitability). Strictly on a NPV basis SP is at PE NPV 20, so market IMO is nearly at the switch point IMO (and/or starting to evaluate higher project output configurations like Stage will production be even higher here if the projects does get to production). A simple way to do the higher evaluations of doubling (Stage 2) is essentially to double the above metrics on the assumption Stage 2 will be funded from retained earnings, and/or simply work with the figures and come up to your own scenarios. And the approach would not include economies of scale from capex spends been smaller per unit of increased output under stage 2 than your stage 1 btw. For me just concentrating on Stage 1 as getting to production and hitting milestones will be great on the SP anyway

I see a combination of probably debt/equity funding in terms of the capex, but this is the key, raising at a higher SP also reduces dilution but also if the market believes you will go to production that is a very good thing because as we know there are a lot of companies out there with plus 3 billion shares on issue with market caps far higher than $1 billion. But bluntly, just get this to production and we can yabber growth scenarios later - obviously getting into market, having a decent graphite resource like RNU has is only an upside after that.

For others, take time, evaluate your investments over a VB and what you decide is your choice. RNU offers rewards, but obviously getting binding offtakes, funding, and hitting production targets a key to long term rewards as well. Quite a long winded post to say little, but don't post much here as have said all I need to say here as now too me it is about hitting milestones etc etc.

All IMO