Putting a value on E25 is difficult because there are so many...

Putting a value on E25 is difficult because there are so many important unknown's. Even if the issue of valuing the ore business's is parked, HPMSM is still hard to value due to not yet knowing the likely future scale, the deal that will fund capex or whether the margins presented in the scoping study will be preserved or even enhanced by the time final decisions occurs (if it does indeed happen). These issues noted, the initial scoping study indicated US$73m, US$141m & US$205m annual operating cash flows from 50kt, 100kt and 150ktpa HPMSM train operations (and volumes of fertilizer grade at only modest margins).

The 10 Oct 2022 HPMSM update implied a future improvement was coming as the fertilizer grade element was reduced if not eliminated and 75kt input ore become 65kt HPMSM. The scoping study was $1,950*50kt=$97.5m of revenue (+$15m for fertilizer grade). This would become $126.8m of revenue from one train [$1,950 * 65kt]. The ore input volume drops from 78.4kt to 75kt so there may also be a cost reduction efficiency. A single train may therefore now have circa $14m more revenue per train for presumably similar or lower costs. This will become clearer with the HPMSM feasibility due about now. If E25 were to get 2-3 HPMSM trains running, along with the ore operation, they would be >A$500m in annual revenue.

If there is US$70-80m/yr of pre-tax profitability from each HPMSM train and if E25 gets even one train built it would appear a market cap approaching A$1b is appropriate. This all assumes the modelling is correct, which is unwise based on the reported Ore results to date. If the off-take customer(s) and associated volumes are strong enough to warrant 2-3 or more trains then a built and operating properly valuation could easily approach A$2-3b. How may additional shares are necessary to get to these valuations - that's a big unknown. If shares on issue remain close to the current 185m on issue existing shareholders could be looking at $10/share in three to five years. That would allow a lot of upside to still exist, even if the share price did increase strongly.

Does the market believe this will happen with these metrics. Nope. Not even slightly, which is why the share price is around $1. Given the ore operation hasn't yet delivered useful profits, its unclear if the market's value is based on the ore operation turning around, it profitably expanding or an assumption that there is a small chance HPMSM will occur.