As Seagull has pointed out I and others have intruded into the charts thread, something that happens on most threads at various times so to get back on track I've started this thread for those interested into projecting AGY's potential future in terms of profitability and shareprice...
Things that need to be taken into account with forward projections other than the fact many aspects are simply unknown.
1: Although we have the ability to sell into the spot market initially ,the expectation is to achieve the best longterm outcome so offtakes won't be based on spot prices but a formula yet to be revealed , but will be below spot.
2: The AUD, very much in our favour at the moment but will constantly change and likely higher in the medium term.
3: Working interest, currently 77% or 1550tpa net for the next 2years at least , moving to 90% on completion of the expansion so 10800tpa net or a 7 fold increase. 25,000tpa would increase this to a 14.5 increase in production from where we are. Would also increase debt considerably.
4: Funds to build the plant will have to be paid back and interest paid ( or some arrangement that achieves the same outcome perhaps through pre payments) and Its almost certain cash will need to be raised, be it through a strategic partner, shareholders or more likely both. So plan on more shares on issue. Personally I expect around 1.6b.
Most earnings will be plowed back into expansion .
5: Expect an increase in Plant cost and production cost through inflation since the PEA and this has been alluded to by JZ, however the overall economics of the project through increased Lithium prices will have improved considerably since the PEA.
6: Any profitability after production and sustainability costs needs to take taxes ( 30%) , interest , depreciation and amortization into account when establishing cents per share earned which a PE is based off.
7: Were making assumptions based on the plant producing to specification. It will likely be the end of the year at least before steady state production begins IMO.
8: Anything projected into the future can only be speculation, change will be the only constant.
9: left field events or things I have overlooked and there will be plenty.
10: Tonopah is the mystery envelope yet to be opened but the paper knife is ready.
The list can appear a bit daunting but its the reality of running a company , whichever way you cut it current and likely medium term Lithium prices makes for very good margins with plenty of wriggle room for variations to the down side and better profits for any upside.
AGY is a small producer and will be for the the foreseeable future when compared with larger operators, but its still a growth company and should be very profitable..
Cheers Whisky
(20min delay)