VMY undervalued, page-259

this is from the updated analysis of November 2020 based on VMYs current DFS:-

The DFS Refresh also assumes an AUD/USD exchange rate of 0.65, optimistic considering prevailing rates over the last decade and futures markets focused around 0.71.On the cost side, it is important to note that the DFS Refresh document discussed here is a 15 page ASX announcement by Vimy, not the actual Refresh report, which we understand is not publicly available. Even on the numbers available, the DFS Refresh shows that the project is at the higher cost end of world producers, in either the third or fourth quartile of the cost curve.
The DFS Refresh document claims capital costs have been revised down by 20% due to the purchase of “fit-for-purpose mining equipment” from an external contractor that no experience in uranium mining listed on its website. The contractor would then operate this equipment “on a cost-plus basis”. Buying second-hand equipment from a contractor reduces upfront capital costs, but is likely to increase expenditure in the later years of theMulga rock uranium 3project, perhaps explaining the DFS Refresh placing an emphasis on costs over the first five years of the project.In these first five years the DFS Refresh estimates an 8% decrease in operating costs, while the life of the project would see only a “nominal” increase in operating costs. This is surprising as such an arrangement would usually involve higher annual operating costs, in return for the benefits of lower upfront capital costs.The “all-in sustaining cost” for the first five years of the project is estimated at US$28.10. However, the life of mine break-even cost is stated as being US$36.64/lb, while a chart suggests the project reaches a zero NPV at US$38.50/lb. None of these estimates appear to consider the costs of closure and rehabilitation, which are significant for uranium mines. For example, Rio Tinto/Energy Resources Australia’s Ranger mine in the Northern Territory currently has a provision for rehabilitation of A$744 million

https://australiainstitute.org.au/wp-content/uploads/2021/01/P972-Mulga-still-does-not-rock-Web.pdf


There are so many holes in the current DFS - this project does not stack up and carries significant risks some of which are highlighted above


walk away John, walk away