Using a price of AUD 700 per ton of garnets in the scoping study (now around AUD 800 per ton) and AUD 640 for ilmenite, HVY expects a total revenue of AUD 1.7 billion over 16 years. And if there is a resource upgrade, then HVY would be extending this to at least 20 years.
At the scoping study prices, HVY projects an annual revenue of AUD 90 million with a 35% profit margin, resulting in AUD 31.5 million in annual profits for 20 years. These figures are based on 2022 prices, which are expected to rise, extending the mine's lifespan as the resource base grows.
With AUD 31.5 million in annual profits over 20 years and 62 million shares, the post-tax profit per share could be around AUD 24 million, or 38 cents per share.
At a 5-10x PE valuation, HVY’s share price could reach A$ 2- 3.8 in the next 2-3 years.
HVY Price at posting:
8.2¢ Sentiment: Buy Disclosure: Held
