General discussion, page-541

Alright chaps, I've seen a lot of random numbers being pulled out of nowhere for the value of CXM with no one ever really justifying their valuation and I've seen some outlandish numbers thrown around. As such I've decided to share my valuation to give you all a sense of what this random internet stranger thinks CXM should be worth so you don't get your hopes too high from the rest of the numbers thrown around in this thread (Note: this isn't financial advice or whatever other disclaimers I should mention).

So with that here you go:
Methodology:
My method for the valuation is as an annuity based on expected net cash flows from sale of rock phosphate from Ardmore, I haven't valued any of CXM's other assets as frankly they're at too early a stage to value accurately or meaningfully in my opinion. I've done the valuation in USD and converted the final market cap back to AUD. I haven't incorporated tax into the model because I'm assuming profits are paid out as dividends annually in which case franking credits would be paid out as well offsetting the tax effect. After performing the innitial valuation I've run a Monte Carlo Simulation with 10,000 random samples varying (almost) all the inputs listed below based on what I think a reasonable distribution is.

Inputs (all in USD unless stated otherwise):
Phosphate price: My base case phosphate price is $184per ton. I arrived at this because I believe a 8% margin over the Morocco Rock phosphate price is appropriate due to the higher concentration and low cadmium content (this is also the margin used in the CXM's DFS) and I believe $170 is a reasonable expectation for the Morocco price. This is due to a) Current market prices (172.5 average for February per World Bank), b) Gut feeling, c) Historic pricing trends adjusted for China's export ban and Russian sanctions. There is an argument to be made for potentially higher phosphate prices, DAP is generally highly correlated with rock phosphate prices and in the recent days DAP futures have risen to nearly $1000 for the April contract whilst last months DAP price was only 747 so there's an argument that rock phosphate will see a similar dramatic rise in the short term, however due to the uncertainty about the sustainability of these prices i've stuck to my conservative estimate.
Production Cost: My base cost is $105 as a conservative estimate based on the updated DFS which showed a cost of $92 which I believe to be far too aggressive as the original DFS showed a cost of $111.
Inflation: I've assumed a 3% annual inflation in phosphate prices in line with historic trends whilst assuming a 2% inflation in all other items
Discount Rate: 17.5%. This is a risky project and the high discount rate reflects that
AUD/USD Exchange Rate: 0.72. Current market rates
Additional Capital Required: $60m, rounded up the $58m per the updated DFS
Capital Raised Through Equity: 70% of the above amount. This is due to the general difficulty early stage miners have in raising debt, I expect most of it to come through equity. I also assumed the equity would be raised at 11c (the last close price)
Capital Raised Through Debt: 30% of the raised amount for reasons mentioned above. I expect the interest on this to be about 12.5%

Putting these all into a model where I assume all payments are made at the end of the year, the debt is raised at the end of 2022, with the first interest payment at the end of 2023 and full scale production starting in 2024 per Centrex's management's plans. This gives me a Market Cap of ~$180m AUD, and a share price of ~0.18AUD (the model assumes there are about 1b shares on issue due to dilutive cap raises to fund production).

This represents about a 65% upside on the 11c it closed today. I see this as significant upside which is why I think its a strong buy but I think anyone mentioning market caps in the billions or even high hundred millions is dellusional.

That being said, onto the Monte Carlo simulation. I used the same model and as above for the simulation but generated random values for each of the inputs based on either normal or uniform distributions that I thought were appropriate for each variable. The results of the simulation were as follows:

Mean Share Price: 18.55c (AUD)
Median Share Price: 18.31c (AUD)
Minimum Share Price: 0 (there were a few cases where the simulated phosphate price was too low for the company to be profitable)
Maximum Share Price: 58.27c (AUD) (this case basically just had a very high phosphate price and low cost, and had most of the capital raised via debt)
Percentage of simulations where share price was below current market level: 17.97%
Percentage of simulations in which a 100% return would be achieved (SP>22c): 34.80%

Do with this information as you will. As I stated I still think this is a strong buy with a significant expected return however it is nowhere near as outlandish as others on this forum suggest. There's the possibility of VERY high returns (see maximum case) however these would require significantly higher phosphate prices for a sustained period of time which I do not think should be relied on when making investment decisions.

Hope some of you found this useful and please DYOR.

Cheers.