Ann: Investor Presentation - Sibanye-Stillwater Investment, page-159

Just got this broker analysis of the deal from Ord's they still maintain a .75c valuation

Company Alert
ioneer (INR)

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Last Price:A$ 0.60

Valuation:A$ 0.75

Recommendation:Speculative Buy

Risk Assessment:Higher

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Transformational JV/ De-Risking Catalyst

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INR has ann a transformational joint venture that neatly funds and de-risks development.

With capital no longer a constraint, our focus shifts to growth and intentions of the partner SSW.

We leave our target and rec unchanged as we pivot our thesis to scaled up option value.

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US$560m Deal: 50/50 JV –Equity Funding Complete

§INR is to from a 50/50 project JV with SSW. INR provides the asset and SSW injects US$490m of capital. SSW to also subscribe to a US$70m placement for new INR equity (+148m shares +7%). §This has several profound implications, mostly de-risking around funding and development execution. INR now has cash of A$180m and does not need to spend a cent more capex post FID. §The equity portion of the US$785m capex cost is complete with the remaining US$300m to come from conventional debt (SSW to help). §The deal implies a US$1.2bn valuation (100%) around fair value to the DFS and 20% more than our risk weighted val of US$1.0bn.

Simbanye Stillwater 101: Big Brother + Deep Pockets

§SSW is a multinational platinum/gold miner with over a dozen mines in South Africa and United States. It has a Market Cap US$10bn and last year generated Ebitda of US$3.0bn and free cash of US$1bn. §Similar to the EcoPro, SSW has limited local brand recognition. But our deep dive indicates this is a large-diversified miner with deep pockets and high conviction in the new green metal space (See SSW 101 pg 2). §In its short history, SSW appears to be an aggressive acquirer along with a track record of turning around unloved brownfield assets of the majors. §Compared to our base case, their 50% share in INR’s Ebitda is too small to be material at US$110m or <5% of group (Fig 3). §In our view, the earnings contribution needs to see a 3-7x uplift to be material to SSW. OR if they buy out INR’s 50% and expand 1.5x-3.0x. §Thankfully the project can readily handle scale and has already been studied at the PFS. We reiterate our scalability thesis (page 5) and update our valuations to a 50% share against a range of options that yields a DCF of A$0.62/sh to A$0.92/sh.

Retain Spec Buy & TP; Scaled Scenario Upside

§We make no model changes and retain our Spec’Buy & A$0.75/sh target. §We have several outstanding questions about the JV structure, funding mechanism and the JV partners growth plans. §We note the 50% project sell down/dilution is a more than our 10-20% expectations, but we think it may be offset by growth/de-risk potential.

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Key Financials Year-end - (A$) FY19A FY20A FY21E FY22E FY23E Revenue ($m) 0.0 0.0 0.0 0.0 0.0 EBITDA ($m) (5.2) (7.3) (7.7) (3.0) (7.9) EBIT ($m) (5.2) (7.3) (7.7) (5.3) (13.5) Reported NPAT ($m) (0.9) (5.4) (8.0) (4.6) (10.4) Reported EPS (c) (6.2) (33.0) (40.5) (23.4) (52.7) Normalised NPAT ($m) (0.8) (4.5) (8.0) (4.6) (10.4) Normalised EPS (c) (5.1) (27.9) (42.2) (24.2) (54.6) Dividend (c) 0.0 0.0 0.0 0.0 0.0 Net Yield (%) 0.0 0.0 0.0 0.0 0.0