Hi dhc. I recognise your name from the days when Obiwan used to...

Hi dhc. I recognise your name from the days when Obiwan used to post on here, so I take it that you are one of the long term holders as well.

I couldn't agree more with your points about the recent developments. I believe that there is a high chance that this project will go ahead. Otherwise, I would have sold out when I broke even last year.

When the FID is achieved, I believe there will be a strong re-rating because the share prices are suppressed for the reasons we discussed above.

I mean just look at the last CR preso (extract below). The base case was for Cu at US$3 and Ag at $1,550 and FX of 0.70. Today Cu is at US$4.8 and Ag is at US$2000, which is equivalent to the extreme upside case of Cu at US$4 and Ag at US$1800 and FX at 0.75.

So at today's commodity prices and FX, you are looking at a project NPV of $1.3 Billion(Billion!).

The forecast Capex for this project is circa US$410m (or ~A$550m). Let's say the management are donkeys and Capex blows out by 50% to A$825m and they have to finance it all by shares at today's price. The current market cap is $160m but includes $50m in cash. That gives us a post-construction project valuation of $825m + $160m - $50m = $935m. That's a $400m upside that the market has not priced in yet.

On top of that you have the following upsides which are not included in the above calculations:
- (in my view) raising Ag prices due to US inflation
- (in my view) raising Cu due to strong demand and underinvestment in supply over the last decade
- Hog's Ranch value ($hundreds of millions???) completely unaccounted for...
- Management might be able to fund a portion of Capex by debt.
- Management might not be donkeys...

All in all, I think the potential upside > risk of the project falling over.

This is all my personal opinion, and according to my wife I'm always wrong, so do your own research.