Cautionary note- this post is kind of base case way of looking at things.
Any improvement in the nickel market ( for example a reduction of the current surplus, which I expect will
most likely occur in the next 1-5 years ), will of course improve the below numbers.
To Jogoo’s post: The good part? Halve the expected NPV, double the current SOI & we still see $3 a share.
Your correctly stated 4.8B/2= 2.4B Current SOI 200,000,000 ( rounded up slightly to make the numbers easier ).
$2.4B/2 = $1.2B @ 400M shares = $3 a share.
The even better part there? Halving the NPV relies on cutting the PFS pricing assumptions in half.
PFS nickel price assumption = USD$25,500
That halving? I don’t see it happening. My longer term price for nickel is $9+ so $19,800 currently of course it’s settled at close to $18,000
Cobalt price assumption? $60,000
Current price = $27,000
Oh no, Clockwork- the cobalt price is less than half! We say. Yes but Cobalt makes up a bit less than 10% of projected output & so has a smaller impact on total returns that give us the NPV.
So! If we use those conservative numbers we see that at current pricing ( close to the bottom of the nickel cycle ), revenue would be a touch over 70% of the PFS assumptions.
An upside to my careful view is that scandium & gold revenues are likely to be added to the assumed overall returns listed in the PFS.
In light of the above it’s very obvious why the JC has decided to invest in us. Make no mistake- that’s what they’re doing. They’re not trading us. They are backing us 100% ( as in backing us with the potential to become equal partners ).
Price shocks will most certainly occur during the projected 40 year LOM- both upside and downside shocks. What gives me confidence is that once nickel moves to a smaller surplus & eventually to a deficit is that it will be very hard for the market to find another Indonesian production boom. A boom that has already run out of steam when it comes to being able to push the price down as much it has in the 2021-2023 period.
That’s why for the long term $9 a pound for nickel as a reasonable base price will most likely prove to be valid- some might see my posts from a few years ago when it was over $12 saying just that & then check what has happened since that time.
If it ain’t broke, don’t fix it’ tells me to stick with the logic that has proven itself over time.
Conclusion? $3 a share looks like a very reasonable guide.
Heck- double the SOI again & we still see $1.50 there isn’t much need to more than double the current number of shares as we have a fully funded DFS in front of us ( which includes corporate etc costs ), & partners who can find funding for the CAPEX if that DFS is positive.
We should be generating sufficient revenue to keep ourselves going sometime in 2028 , ( even exploring/developing other assets ), before another 200,000,000 shares need to be issued.
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