also the Bell Potter report values MNS currently at $1.10
Valuation doesn't include battery facilities.
Great read!
https://drive.google.com/file/d/0B4uXa4wmbiIMb1ZTdlZJallKX28/view
MNS as part of the Imperium 3 consortium
In summary, the above deals have been signed between the following parties:
• Huron Campus gigafactory: Imperium3 and New York State Government
• Townsville gigafactory: Imperium3 and Townsville City Council
• NRW gigafactory: MNS and WIN Emscher-Lippe
• Terra E offtake: MNS and Terra E
MNS holds a one-third interest in the Imperium3 lithium-ion battery consortium, in which it played a lead role in establishing. The other two major partners (also one third interest each) are C4V, a lithium-ion battery IP company and Boston Energy and Innovation (BEI), an ethical investment group chaired by Bill Moss AO and whose primary role is in securing financial support for the projects. It is envisaged that Imperium3 will retain majority equity stakes in the planned projects, reflective of any equity component contributed by third-parties. However, at this stage, the bulk of funding for these projects is envisaged to be provided by State-backed development funding and debt. This implies a potentially large ownership share for Imperium3 and hence MNS. For the NRW gigafactory an equity share is being negotiated on a separate basis and the Terra E deal is for raw-material supply alone (no equity component). Page 4 Magnis Resources Ltd (MNS) 16 October 2017
Valuation implications
We are yet to incorporate a revised valuation methodology to reflect this latest strategy. However, it is clear that as these projects advance, delivery is de-risked and the company becomes more a manufacturing and technology company (as opposed to a mining company) the valuation proposition will also transform. While we do not draw a direct comparison, one company that MNS is looking towards is CATL, a Chinese battery manufacturer whose main business is providing battery solutions for electric vehicle and renewable energy applications. Currently producing 7.5GWh of battery storage per annum with plans to grow to 50GWh, a transaction in March 2017 for 1.19% of the company for US$175m, implied a valuation for CATL of US$14.7 billion (
US$2 billion per GWh of current production capacity). MNS is working towards a share of 3GWh of production by end 2019 and a total of 60GWh across the three planned facilities. On these metrics this would imply an equity share in an enterprise valued at
US$6 billion in two years time. From the point of view of a multiples valuation, the Imperium3 consortium business case envisages one scenario where it would achieve margins of the order of US$100/kWh of lithium-ion battery production. For the 3GWh of production targeted for end CY19, this implies operating cash flows of US$300m per year for Imperium3. Assuming a cash flow multiple on a technology business of 10-15x, this implies an equity share in an enterprise valued at US$3.0-4.5 billion in two years time. With these deals at an early stage and the final equity shares in the enterprises still evolving, it is too early for us to apply this to our valuation methodology. However, it does give an indication of the scale of the opportunity that is emerging for MNS and leads us to consider MNS as a unique and low-cost option on lithium-ion battery production.
(20min delay)