ADN pre-DFS target of $0.26 to $0.35, page-356

With all the discussions around share price recently, I have spent some time updating my discounted cashflow models for the GW project in light of the BOA's and updates from the company. IMO current fair value for ADN shares is 16.8c fully diluted based on a DCF model on the following assumptions (some assumptions are up for debate to be confirmed through DFS/BFS).

- LOM 26 years
- Production of 116ktpa refined HK in years 1 and 2, increasing to 232ktpa from year 3
- Average sale price $900/t based on weighted average between $700 for ceramics and $1,000 for coatings (total guess)
- AISC $375/t which includes a contingency of 7% based on PFS (yes this may be lower)
- CAPEX and working capital $115m
- Sustaining capital of $15m over LOM
- No debt
- Discount rate of 16% - the discount rate in the PFS is 8%, but to me that is not a fair reflection of risk at this stage of the project (my earlier models used rates of 20% to 25%, but I have brought this down to 16% due to de-risking from BOA's and the last CR). This is my view of risk but everyone will be different.

Outputs:
Present Value of 100% is $581m
ADN 75% share is therefore worth $436m
Fully diluted SOI 2.6b
SP $0.168

If I use an 8% discount rate I get (and probably a target after ML approval, final BOAs and funding sorted):

Present Value of 100% is $1,136m
ADN 75% share is therefore worth $852m
Fully diluted SOI 2.6b
SP $0.328

Obviously excludes concrete additive, NNT, HPA, extra ground etc etc

UTV