With some "80:20 maths", VIC1 and SA1 alone should give an EV of circa $20M based on previously provided capex estimates ($13.8M and $22.4M respectively), target IRR of minimum 20% (reduced by 16% for Palisade's share), discount rate of 12% and 25 years operating life. Then on top, add the 3 further plants that Palisade have rights to funding and the $45M Yarra Valley contract, we are conservatively looking at an EV of $40M to $50M - 2x to 3x vs today's EV.
The market justifiably remains sceptical of Management's ability to execute. Hence, I'm not expecting any meaningful re-rate until upcoming milestones are met (and on-time), e.g. FID for VIC1 and SA1 (Q1 CY2023), construction commencement of Yarra Valley Water plant (Q1 CY2023) and FID for Brickwork's first plant (CY2023).
DEL Price at posting:
7.9¢ Sentiment: Buy Disclosure: Held
