Ann: Phase 1 HMW DFS Delivers Compelling Economic Results, page-103

@mondyinvest - I do agree they should have used NPV10. With interest rates where they are now, NPV 8 I think is no longer a fair discount rate ( that is a post tax rate, so npv 10 % implies a pre tax rate of 14.3% and 8 % implies 11.40% pre tax rate). Likely any substantial gearing now if that is used ( as opposed to a prepayment) would be circa 10-12% in pre-tax cost range so the NPV discount rate could actually be less than the likely future borrowing rate.

Ordinarily in finance theory ( if one pulls out Markowitz's CAPM model) , shareholders required rate of return is always much more than your borrowing cost because such a rate is formed by adding on a substantial risk premium on top of a riskless debt rate and usually this will work out to be much higher than a commercial lender will require as they invariably get paid first and will take fixed interest payments along with security. The very idea of leverage is that you borrow at well less than the shareholders cost of capital so using debt funding adds leverage to your returns by shareholders (ROE) pocketing the difference between their required rate of return and their borrowing rate to lever up ROE. If you increase the discount rate to 10 % , NPV drops to circa $ 335 M. Still pretty impressive but for an elaborate pilot plant.

Chloride pricing - Agree too that the price assumed on chloride was bullish and above my own estimate. That said but I would assume this would have been thrashed out with Wood McKenzie and Daniels firm ILI. They couldn't have got that higher figure in there without a lot of substantiation of why it is reasonable in the long run. There must have been some discussions with potential 3rd party buyers that Daniel could point to justify that number would be likely, you cant APN that number.

I was guessing a long run chloride price of around $ 15 K ( which is still more than the carbonate price was 2-3 years ago). My logic was a long run carbonate price of $25 K ( which I think is fair) given even with the collapse of late last year we only got as low as $ 30K and now it has bounced back into the $40's, so $ 25K long run I think is defendable. $28 K they used perhaps a bit toppy but its not over the top. I was then using a payability factor of 66.6% for chloride or USD $ 16650 . So their payability factor is about 10 % higher than I expected.

If you rerun the NPV with that carbonate price and payble factor you get a chlorid price of $ 1,650 and you get an NPV of around $239 M USD. Again still pretty impressive for a small pilot plant. Ironically that would be circa $ 350 M AUD, and that is still more than our current market cap. So the market is happy to value us at less than a reasonable valuation of a small pilot plant designed to operate at a fraction of the overall expected long run throughput. Shows the market is still being very cautious which given all the delays here probably is understandable.

This highlights mMore work now required by management to re-instil some confidence to the market. They really need to ensure stg 2 dfs is out in Qtr 3 as promised.