Alright i'll do the numbers myself on this:
With a current market cap of $93mil (not including the LPIOA's as they are out of the money) + CAPEX spend outlined in the Hallgarten report of $183mil (which is 50% of the total capex) gives you an enterprise value of $276mil for the project, assuming that the capex required will be funded from equity (placement, rights issue, strategic off take partner buying equity) to raise the funds. Should a mixture of Debt + equity be used to fund the Capex, which is highly likely, this will reduce the current enterprise value.
Iam going to be mid range and assume that 50% of LPI's CAPEX will come from debt from international banks and possibly and end user and the other 50% to come from equity being issued. This would assume $91.5m + the current market cap of $93mil = $184.5m is the current enterprise value.
Based on the project NPV (which most of us feel is conservative) of $1.05bil, LPI's 50% stake in the project would mean an NPV for LPI's share at $525mil for Maricunga alone. Just to keep this clean, lets not add any value for the potential domestic hard rock reserves, as to date, the company is yet to define these.
So where does that leave us;
- If the company was to fund their 50% CAPEX spend via equity, the current enterprise value of the project for LPI = $276mil vs a project NPV of $525mil. Thus giving us a difference of $249mil or in share price terms (249mil / 260.7mil shares on issue) =
$0.955 in share price.
What does it all mean? If the project is fully funded by equity, for LPI shareholders to reach the $525mil NPV / market cap, the share price would need to be $1.37
- If the company was to fund their 50% CAPEX spend via a mixture of 50/50 debt and equity, the current enterprise value of the project for LPI = $184.5vs a project NPV of $525mil. Thus giving us a difference of $340.5mil or in share price terms (340.5mil / 260.7mil shares on issue) =
$1.30 in the share price.
So if the project is 50/50 funded via debt and equity, for LPI shareholders to reach the $525mil NPV / market cap, the share price would need to be $1.72
It's worth noting that these numbers change considerably if any of the following occur:
- CAPEX required,
- NPV of the project changes,
- Share price at which the funds are raised issuing new equity.
It's up to the CEO and board to navigate this in the best interest for all shareholders and as much as it's no guarantee, i like the fact that Martin and the Board hold a significant amount of equity in the business. It will hopefully mean that they are less likely to fark it up.
I really think the company should be spending a few $ to define their two WA assets as they progress with Maricunga, as this will help build a quantifiable valuation for these assets to help build out the LPI portfolio.
Happy to be corrected on the analysis or numbers above. Just using it as a starting point.
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