I’m out today unfortunately. The problem is the doubling of...

I’m out today unfortunately.

The problem is the doubling of stage 1 capex, which destroys the IRR and extends the payback. US$80m is, being generous, A$120m. Let’s say they can get finance, which at best will be 55% means $66m debt and $54m equity plus working capital. Call it $60m all up for a CR plus the debt to be fully funded. Sure they could get VERY lucky with a prepayment tied to an off take but I doubt that.

A $60m equity gap is more than twice the current market cap of $27m. An off take or two could bump it a bit higher but blind Freddy can see the big equity ask that’s coming which will cap the price over the coming months and IMO will move this even lower making it even harder to fund.

This won’t be a popular statement but it’s 50/50 if this actually becomes a mine - sure hope I’m wrong though as I like the company.

Either way there’s significant dilution coming. The best way to play this is to probably wait until the big CR which will be when they also have finance, offtakes and generally more certainty. That’s a lower risk play for a low market cap graphite play with multiple revenue earners. If they can execute from there there’s still multibag potential in time.

If you think the above is too pessimistic consider the best case scenario outside of a takeover. To really get the market excited they’d need a big name offtake and say a $10m prepayment. That will drive the SP higher. If all goes perfectly and it hits say 20c (ie more than double the current price) then theyre still raising at least $50m at 15-16c which is still +100% dilution.

Note: I haven’t looked at any in the money options but nor have I considered the initial capital burn for their other project which still needs start up capital.

GLTAH