It could be that the probability of E25 actually getting HPMSM going has shifted from near-zero to something a little bit higher.
If E25 does manage to get a 50kt or 100kt train started quickly, there is a very strong likelihood of E25 having sufficient demand that by the later 2020's you are looking further facilities. E25 suggest US$558k/t for 100kt. Lets conservatively call this $750/t. E25 suggest $1,950/t, lets conservatively call this $1,500/t. Let's assume later this decade E25 were at 200kt volume (which is not so conservative, but what the market would need to get from multiple places if the demand forecasts are correct). A $750/t margin on 200kt would be US$150m/yr of EBITDA.
E25's market cap is A$210m (US$150m @ a 0.71 future AUD/US exchange rate). The existing ore operation and HPMSM is trading on a far-distant prospective EBITDA multiple of under 1.0x (if the ore operation can be positive EBITDA by then). While the existing ore operation needs changes to do well, it still has potential. Clearly the market doesn't think the Ore operation will be fully sorted or that HPMSM is happening and quite rightly, more positive evidence is needed. With this potential but the current market cap, the market is valuing the probability of a low equity dilution implementation of HPMSM at pretty long odds.
If those HPMSM odds shorten, E25 can increase a lot.
Then again, it could just be a pump, capital raise, dump scenario. Them's are the risks of speculative investing DYOR.
E25 Price at posting:
$1.38 Sentiment: Buy Disclosure: Held
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