Ann: Arrowsmith North Updated BFS, page-100

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carnabombers

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08/03/24

12:40

Post #: 72812965
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Originally posted by Kangaroo111: ↑

The economics have already been done on 55M debt financing @ 12% interest = $6.6M per year with CAPEX at 20% contingency.

I dont understand your reasoning to update BFS financials to include 80million in borrowings when the BFS already uses 55M in borrowings and 10M in equity to make up the approx 65M in capex? You would be assuming that CAPEX would be 90M for 80M in borrowing (+10M in equity to standardise it) which is 35% higher then current CAPEX estimates?? Plus an extra 10M in borrowings is an extra 1.2M per year in interest repayments??? How does this influence PBT when in Y3 PBT is 40M at bfs assumptions?? Im so confused.

Ungeared analysis is purely consistent to the BFS in 2019 and allows for flexibility with how they actual deal with interest repayments when they get to production. Borrowing costs of 6.6M per year + another 2.4M (on an extra 20M in borrowings as a crazy assumption) will still not negatively leaver VRX cash flow when they are in the green by Y3???

In Y3, ASN profit about 40M and financial model assumes no CAPEX is drawn down over LOM.

If Bruce wanted to, they could go hard and pay off close to 70% of the debt which means no profit in Y3 but interest repayments will be on 15 million which is 1.8M dollars thereafter. Peanuts...

Exchange rate and product pricing has more of an effect than minor borrowing costs. Why are we so fixated on borrowing costs when simply a US$2 per tonne in product can make a substantial rise in the NPV?

Everything is a trade off and the best for investors in the long run is to finance as much of CAPEX as debt as to not dilute the share registry in the long run... And not paying off debt can be healthy if there is company growth, which their is; ASC and Muchea both which will require significant CAPEX but have the potential to be fueled by the profit generated from ASN which would mean no major hit to share register dilution.

Would rather $55M be diluted in the share registry in equity financing instead of $10M??? Each to their own!

It sounds like you are taking VRX as a 1 project company. If it was, I would not be here because there would be no growth and the share market loves growth... The end game is to get to 03 mines up and running and my time horizon suits to hold this for another 20yrs.

Also probably worth a mention, Fenix resources issued an NPV of about 60M AUD with an IRR of 60% and a LOM of about 6-7yrs in 2020 when they were trading at 3c. Now their market cap is 170M and at 24c... Took them just over 2 yrs to complete enviro approvals with application in Sept 2018 for a very small project...

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I want to see the geared npv. Thats the real world number. Ungeared means nothing.
Also, the capex in 2019 was about $12.5m per plant by memory. Completely different scenario.

VRX Price at posting: 9.8¢ Sentiment: None Disclosure: Held
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Ann: Arrowsmith North Updated BFS, page-100

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