I'd recommend calling the company and teasing out their logic. You can express how you thought it should have been handled and perhaps they can give you context as to why they didn't go down that pathway. I'm just a holder and giving you my views as to why i liked the outcome as opposed to a hypothetical CR where the S/P almost doubles from here.
IMV current market cap isn't hugely undervalued, it was huge when it was 10m. When you consider we haven't even released a SS. There are peers out their valued a lot higher but are also 2-3years further in development with more cash etc and so warrant higher valuations.
If we refer back to my previous NPV calc's based of opex and AISC then the current MC is around 10% of the NPV of FCF model. for a company pre SS this is fair. Why is IXR currently a large portion of portfolio.
1) because i've done very well by investing early
2) because I see that 10 times upside coming to fruition over the next 1-3years.
It's easy to say, we're undervalued. But where's the science and what's it based off. Maybe peers are overvalued. By my calcs we're trading around 1/9th of a FCF on 100% ownership. Factoring 60% ownership then its around 1/5-1/6th. peers are around 3-4 on average. Some MC's might be outdated and yes the basket is improving. so is everyone elses. (albeit not to the same extent)
Is there upside to IXR's economics? Absolutely, improved recoveries, Scandium credit, use a PE value model instead of FCF NPV models. Extra project % acquisition. Do all this and you can make a case for large upside to the below.
What holders rarely do is make a case on the downside. What if rare earth pricing pulls back a touch with fresh supply. What if opex goes up with recovery increase. What if there's further dilution. What if there's delays (some rare earth projects been developed for 10years.), maybe only 70% payability not 80%
Go onto any of the stocks listed in the table above and you'll find all the posters share a similar view that their stock is undervalued for x,y,z reasons. I had stated for several months that i believe fair value to be anywhere between 50-400m in IXR's current nature which is large bracket i'll admit. But it's based off future economics with a factor applied to it's current development.
There was a time where ixr was worth 10m and obviously to me that was very undervalued and i piled in. it might go to 400m MC in 3 weeks time for all I know. There won't be too many long holders (been here 2years) willing to say hey I think this is overvalued I'm taking some profit additionally.
what it boils down to IMV is future cash profit from operation and then a probability of achieving it. SS will indicate a margin close to what i'm suggesting IMO and so the profit margin will be ballpark accurate. people can then turn around and say we should be worth 1.4bn P/E of 10 or go 2.8bn P/E ratio of 20. But then look around and find projects worth exactly what the SS NPV. Reality is, mining stocks trade at fractions of the NPV for a plethora of reasons. Investors need to work out the upside and downside to that (sensitivity analysis) and then ask you're if the % of the NPV at which the stocks trade at is fair.
If anyone wants the full suite of economic breakdown which i'm using to gain my fair value it is as per Post #:50643443. It's sliding scale of bearish/bullish views with a % factor based on development. essentially the below.
1) SS/PFS performed, no offtakes, no finance = 10-20% of NPV
2) DFS/BFS pilot plant no offtakes no finance = 15-30% of NPV
3) Either of the above with offtakes secured = 25-40%
4) Any of the above with finance secured = 35-50%
5) in construction near term production = 50-75%"
also @mraligator whole post not directed at you just the first sentence about getting in touch. The rest is more a brain dump about my thoughts on current S/P. Upside and valuation.
SF2TH
IXR Price at posting:
4.7¢ Sentiment: None Disclosure: Held
(20min delay)