ADN - CAPEX to NPV Comparison, page-10

It is dangerous to focus too much on a ratio like IRR. It’s a big advantage but it’s not as important as the ratio of your final fully diluted market cap to the NPV and then making an adjustment to that ratio for your perceived risk and potential upside through expansion and other potential projects not factored in to the NPV.
As an example, if a stock had a very high IRR and very low capex, as is the case here, but the fully diluted mc was already say $400 mill and the NPV was $400 mill with low risk but without options to expand cashflow beyond that used to calculate the NPV, then that stock is fully valued regardless of how high the IRR is, or how low the capex is. A very high IRR and very low capex greatly reduces risk but does not change the valuation or the ratio of market cap to NPV.
In this case, risk to funding would be relatively very low, pricing risk appears low on the product due to its scarcity and the price assumption being at the bottom of the expected range of prices. Upside to NPV is possible if they define a second resource and expand production, possibly get into HPA production, etc. While a low capex helps to reduce dilution through capital raising to fund the project, this company has a very significant number of in the money options so this will get heavily diluted when those options are exercised. That needs to be factored in when calculating the ratio of final fully diluted mc to NPV. That has a similar effect to having a higher capex which gets fully funded by a diluting capital raising without using debt.
So all these factors need to be weighed up together rather than just focusing on the advantages alone. When I factor in the options, my upside target based on NPV alone relative to fully diluted mc makes this look much less undervalued than many here are suggesting. However when I look at the potential to boost the cash flow that determines that NPV then I can see further significant upside. The chances of doubling production through the second similar grade deposit is attractive as is the he possibility of defining a high grade resource, possibility of HPA production, etc.