KDR numbers pretty well on-par with PLS numbers. However, PLS...

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FvoLvo

916 Posts.

03/10/17

22:50

Post #: 27636771

Originally posted by Germantheologist ↑

NPV is not Market Capital Value and is not related to company value, it's just a comparative decision making tool. A proper evaluation would be a discounted cash flow model, which we could pretty much do, given the data now available. What kills these projects is early cash flow and long run debt. Under this deal both look very sensible. I calculate a share price of between $3.50 to $5.0 given the 50% holding. Of course this is a rough assessment full of subjective assumptions. Also this is small scale given the size of the overall resource and it is a big assumption that production will be capped at 288K tons, in my view this could treble in the near term (Say 5 years+). especially if they get a long run product price close to the $700. Really this is a very low risk project now and spending a bit more time getting design right is money well spent. Give me some time and I will publish a full model here, showing my assumptions.

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KDR numbers pretty well on-par with PLS numbers. However, PLS numbers include credits for Tantalum but doesn't factor in their debt cost as the deal was done post DFS. KDR should be well ahead on DCF as they look to be fully funded or negligible need for additional
funding.

Column 1 Column 2 Column 3 Column 4 Column 5

0 KDR (SS) PLS (DFS) Difference

1 USD USD

2 Concentrate Price $/tonne 685 537 21.6%

3 Post Tax NPV(10) $M 565 532

4 IRR 57% 38.1% 33.2%

5 EBITDA $M 118 91 23.1%

Other than PLS being about 12-15 months ahead of KDR, why is KDR MC =$312M on a 50% basis and PLS MC=$1028M on a 100% basis? i.e. currently 65% gap in value.