CZR - Robe Mesa correction In my previous review I used the NPV...

CZR - Robe Mesa correction

In my previous review I used the NPV stated in the company website Robe Mesa Project page. Over the weekend I dug a little further and found DFS. It appears that the Robe Mesa Project web page has not been updated to show the latest DFS NPV. So my post and assumptions were incorrect. My apologies.

The Robe Mesa DFS showed an NPV of $ 256m https://wcsecure.weblink.com.au/pdf/CZR/02724273.pdf

The RH base Scoping Study NPV for was $356m

Sale price of the Robe M project was $102m for the 85% CZR owned. That means the value place on the purchase of the project (100%) was $120m.

Interestingly the Robe M purchase price is just under half the NPV.

Half of the RH SS NPV would be only $178m. I think it would be safe to say that no shareholder would entertain that (unless they were the buyer, lol). RH shareholders know there is much more upside to come not only in the PFS but with a potential nearer port becoming available that could be a game changer in terms of profitability.

Also note that (I don’t believe) the potential buyer of the Robe M project has the luxury of nearby rail so can’t cream additional margin and profits by switching from road haulage to rail.

If the PFS shows an NPV of say $560m, there is no way that half that could in any way be seen as even a base fire sale price particularly with the current and predicted iron ore prices and RH potential. To me, the dynamics are quite different.

Should RH start trucking and shipments in 2025 the Blacksmith Project capex may well be paid off within the first year. Then there is planned increased tonnage following that first year and the potential of a nearer port becoming available maybe around 2028 or 2029. I am still speculating that the NPV will become greater than $1 billion as the project progresses.

As I’ve said before I can’t imagine OCJ (or TIO if they want to exit) entertaining any deal to sell for less than $1 billion. What a final deal (if there is one) would be is anyone’s guess. BTW, if TIO were to acquire RH they would only need to acquire the remaining 40% of minority holder shares. Every shareholder will have their opinion of fair value.

Now, my quick and basic analysis and figures could be wrong. I welcome corrections, comments, additional information etc. I would also love to see someone that has more financial savvy than me prepare a more detailed analysis.