Hi All, just looking for a bit of feedback from some of the...

Hi All, just looking for a bit of feedback from some of the experts on here.

I am trying to understand some of the detail around the financial modelling and sensitivity analysis- especially slides 30 & 34.

The headline financials including NPV & ROI etc.in slide 30 are quoted based on "@ the floor price" and an average revenue per tonne of AU$275. I realise that relates to the Average revenue of 1 year DSO and 4 years MGC across the contract period however I also note that current ilmenite prices (47 - 49% TiO2 - say 48%) are in excess of $400US/T (AU $606/T).

In year 2 Barrambie will produce a MGC at 36.5% TiO2 so could we expect to achieve a price that is approx 76% (36.5/48) of the Ilmenite benchmark? At todays prices that would be AU$461/T or AU$186 (or approx.67%) higher than the prices quoted in PFS model. I assume the pricing formula has some discount factor for the extra processing that needs to be done to get the Ore and MGC up to ilmenite grade - i'll be generous to the customer and say that it is split 50:50 so instead of AU$186/T we now have $93/T or 34% over the assumed price. (I actually think a processing cost of $93/T is very high but lets be conservative)

If we do a similar calculation for DSO but @ 27% TiO2 we get 27/48 = 56% x $606 = AU$341/T - again I do not know what discounts might be built into the pricing but I note the opex estimates for the concentrator are $32/T so lets use that plus a margin. Even at 100% margin (I doubt it would be that high but again, for the sake of conservatism....) the cost reduction in price is $64/T therefore a realised price for DSO of AU$277/T. Please note that price is still higher than the average price for DSO & MGC used in the modelling.

So what does that all mean? Assuming no growth (or decrease) in average TiO2 prices across the 1st 5 years of the project the realised price would be more like AU$350/T or approx 27% above the PFS price.

According to the sensitivity analysis on slide 34 the biggest driver of NPV (as you might expect) is revenue and if you increase the revenue by 27% (all else being equal) the NPV increases to over $800M i.e. it more than doubles.

I am sure my calculations/guesses are wrong and I hope some experts in the area can give myself and other interested investors some insight into the real numbers however what this indicates to me is that NMT are possibly being conservative in their projections and the potential value of Barrambie is much higher than the headline numbers.

If NMT put out a PFS for a $230M investment with a NPV of $800M+ they would (probably rightly) be treated very sceptically by the market but I do not think it was a coincidence that they included a sensitivity analysis that includes exactly the scenario laid out above. I have no idea what ilmenite prices are going to do in the next 5 years but if the market is in relative balance and there is a shift to chloride feeds then it is reasonable to assume that realised prices may exceed the conservative "base price" assumptions in the model - don't forget it is actually a base price.

As usual, I'm probably wrong.

GLTAH
Cheers
SC