I'll breakdown some assumptions to clear it up. From the IPO the cost to build was around the mid $23m and since then everything I've read has said cost supply inflation post covid was around 30% so assumed a cost of $30m and then to be conservative added a $2m buffer to total $32m.
Under this assumption, the company is using the $25m SA1 debit available plus $7m cash over the project. the other $5m in debt has been used to pay off the Palisade notes and the LGC trading debt. Now after look into wording more from announcements I'm more confident that my $32m is overstated so the company should be able to keep some cash on hand for future projects.
Now in regard to return on investment, As the SA1 asset is producing ~$3m cash flow post interest expense and tax that comes to 10% ROI if we calculate the total cost as $30m and this doesn't include any upside from Green CO2 sales for example. The cash flow also increases by ~$1m once they refinance assuming a debt yield of 6% for a green bond. In total, under my current assumptions the plant takes 8yrs to produce >$30m in cash flow and the IRR which in simple terms is the ROI over the life is 13% in my model.
For the multiple project financing, from the 1H25 investor presentation they state they are activistly engaging with debt financers for project funding for VIC1 and future projects. As they never provided an updated cost or what they've spent so far on SA1 all I can comment on is the debt convents stated in the 1H report. the Tanarra facility terms cap leverage at 4x net debt/EBITDA so from my very simple calculation, this number will be around $50m once the plant is up and running so that gives them ~$20m of debt they can raise without breaking the terms but this will be further down the link from my understanding as that $50m is from when the plant is up and running which isn't for 12months still...
Hope this makes sense and is helpful.
Happy to keep chatting and hopefully unlocking more understanding in Delorean
All my own opinion and commentary on DEL. DYOR
DEL Price at posting:
12.0¢ Sentiment: Buy Disclosure: Held
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