Let's do some back-of the-envelope stuff for JB with some round numbers, just for sh!ts and giggles...
Firstly, let's consider a valuation methodology that incorporates a P/E model in combo with an NPV model...
Each method has pros and cons, happy for others to elaborate.
...so, for the sake of some scribbles, let's just examine a combo that is 50% P/E and 50% NPV based...
Actually, let's just ignore the NPV half for now, and just examine the 50% P/E portion.
Simple round numbers scenario:
300ktpa
USD$1000/t margin (DYOR and sensitivity analysis, this is just a starting point)
(assume margin = EBITDA /t for the sake of the estimate)
Once ramped (2025?), earnings = circa USD$300M pa.
SOI = 640M
E = USD$300M / 640M shares = USD$0.47 per share
50% = USD$0.23 per share
= AUD$0.33 per share
For a P/E of 10, P = AUD$3.30 per share
P/E of 15, P = AUD$4.95 per share
P/E of 20, P = AUD$6.60 per share
This suggests that JB might be considered to add several dollars to the share price, assuming it is not/minimally factored in already.... of course this "should" evolve (be added) over time, with continued development and de-risking of the project.
Is this reasonable? You decide.
One may argue that this is too much, considering the NPV of the project.
Others may argue that a P/E method is relevant because it factors future growth beyond the "defined project", enabled by significant future earnings and opportunities that this creates for the company...
The combo method considers a bit of both.... and note I have only considered one "half" of the combo as noted above...
hmmmmm... interesting.
IIRC at least one of the analysts used a similar method (P/E NPV combo) in their model for GXY a little while back..anyone recall or have info handy?
In any case, it should be rather "significant" at least, imo, especially if there is tangible progress towards a 2024 commissioning!
And don't forget the relative simplicity compared to Li brine (even if the environment is a bit tough i.e. cold!) - this is literally dig, crush, DMS etc; not some highly complex specialty chemical processing wizardry.
Thoughts..?
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