Ann: Technology Partner MOU Signed with Stamicarbon, page-43

Now that we have guidance of 300ktpa of ammonia nitrate for the initial 200MW green ammonia project, we know the tariffs and we have been told in the presentation that gas prices make up 80-90% of the variable costs, I have updated my spreadsheet. It again highlights the massive advantage of the tariffs for the 200MW project at 1.1c and even at the 1.5c average that I assumed for the stage 1 +2 project.
Tariffs of below 5c are needed to be competitive with gas so I compared MNB's project to a "competitor" with a 4.5c cost of electricity.
"Currently, an electricity price below US $0.05 c/kwh is required for green ammonia to be competitive with fossil-based ammonia" (slide 5 June 2022 presentation).
The total electricity cost is easy to estimate. I based my "other costs" on the statement "Natural gas represents 80-90% of the
variable costs in fertilizer production" also from slide 5. I set the "other costs" at 20% of total costs. This actually puts the competitor project at a loss if ammonia nitrate prices fall to $300. So $300 should be an absolute base case if the world wants green ammonia.
At $300, MNB would still be very profitable, delivering around A$70mill per year before tax on the initial 200MW project and over $200mill per year with stage 2.
Add to that the US$89.9mill (A$130mill) per year for the phosphate at full production (from scoping study) and we should be at combined earnings for both projects at around $330mill per year at full production - and that's at base case fertiliser prices well below current prices. That would be a number of years away but gives us an idea of potential minimum future earnings. With earnings like that, I can't see why the market cap wouldn't eventually approach A$3billion. It's currently just $70mill.
At still conservative ammonia nitrate prices of $370, the competitor project at 700MW would generate only $60mill per year. Not nearly enough to justify investment based on the required capex for a 700MW project. However these projects are being planned so ammonia and ammonia nitrate prices will likely be above $370/t. At $370/t AN, MNB should generate over $300mill plus the $130mill from the phosphate for around $430mill per year. Market cap in excess of $4 billion? Crazy numbers but if anyone can see a problem with my numbers, please reply.
While we wait for full production at a number of years down the track, cash flow is set to begin with the phosphate next year and by the following year (2023/2024) for the 200MW which should deliver well over $100mill per year cash flow. So within a couple of years, a mc in excess of $1 billion seems likely to me. Currently $70mill. I'll assume $100million with dilution to get us to funded for the phosphate (with some debt in the mix).
I see very serious upside ahead for the next 6 months and beyond. The stage 2 adds the extra upside, so the story certainly isn't over at a $1bill market cap. Very high growth should follow with stage 2. Very high growth usually implies a higher price to cash flow multiple than the multiple of ten that I have considered above. This looks like a great long term investment to me.