What's Astron worth?

I've just being doing some very rough calculations (helped by chatgpt i admit) to try to work out if Astron, and particularly the Donald Project, hold up. More specifically, a couple of years has passed since their DFS put a NAV of $850 million on stage one and $2.2 billion on stage 2, and i wanted to see how that stacks up in current market conditions. This is back of the envelope type maths, so I'm very open to comments and critique. I've also been using the Blue Ocean Equities analysis from June 2024 as a summary for some of my figures, so hopefully that doesn't have any glaring errors.

So for stage 1 (which I'll focus on) they're expecting to produce about 230000t of HMC (heavy mineral concentrate) and 7000t REC (rare earth concentrate). In their DFS they projected revenue of US$425 for HMC and US$14000 for REC giving revenue of about $140m p.a for each (on an assumed exchange rate of 0.7 for US:AUD). So about $280m p.a. revenue. From what I can see, costs were projected to be about half of this as EBITDA was projected at $148m p.a!

So whats changed since the DFS. Chatgpt tells me HMC prices have been reasonably stable and that US$430/t is a realistic price for HMC. This depends on the zircon, rutile, ilmenite mix, of course, but the Donald mine seems to be at the more valuable end. The exchange rate is about 65c rather than 70c, which would make it $660/t for HMC and give revenue of about $150m p.a. just for the HMC. REC on the other hand has decreased somewhat. It's hard to find exact figures, but it seems a range of US$6000-US$10000 depending on proportions of various REEs. At current exchange rates, that's about $64m - 108m p.a.

Based on this, yearly revenue should be $214-258m p.a. which is a bit less than the DFS due to REC price decreases. Still, assuming mining costs are still about $140m p.a., that still leaves a healthy EBITDA of $74-118m p.a. Remembering that 51% of this ($37-59m p.a.) will go to Astron given the JV structure. This number is very sensitive to REC prices, which seem to be uptrending from a slump. Theres also the geopolitical aspect these days which should add a premium to rare earths mined in Aus and refined in the US. I'll also add that radioactive content of REC is usually considered a negative during to regulatory hurdles, however given Energy Fuels, a uranium producer, is the buyer, it seems obvious that the trace uranium in the REC isn't going to be a negative in this case.

So I guess I've reassured myself that the Donald mine should be very profitable (and thus hopefully shouldn't have problem getting debt funding). I also feel there's more upside to these numbers than downside. There's also the fact that they'll use some of the HMC for their downstream processing facility in China, which should hopefully turn a decent profit given the facility has basically been set up process fine grain HMC produced from Donald. Remembering this is completely separate from the Donald JV.

To me ATR seems so undervalued its crazy. I think some of the reason is related to lack of liquidity. 88% of shares are held by the top 20 shareholders and its very thinly traded. This basically means that no one with any decent money to invest (i.e. institutions, soohisticated investors) can get in on market anyway. Instead the share price is probably determined by regular old retail investors like me with a few 10s of 1000s of bucks to play with in the hopes of funding a family holiday. Management have made a bit of an effort in recent years to attract some new investors in capital rasings, which have been at steadily increasing share prices (56-66cps), but it still way too tightly held for the share price to easily adjust to reflect inherent value. I'm happy to be patient for a couple of years and let them get into production. I can't see market cap remaining around $100m if they're making half that in profit a year...