Some observations:
Schedule 4 - Independent Expert's Report
BDO considers the value of the Kalkaroo Development to be in the range of $400 million to $480 million with a most likely value of $440 million. (pg 75)
BDO has used what seems a very high discount rate of 11% in its base case. (pg 73)
BDO Sensitivity analysis:
![]()
From the above table, as the discount rate is reduced by 0.5%, the estimated NPV increases by ~ $25 million.
In comparison, HAV has been using a discount rate of 7.5% in its NPV matrix.
Extrapolating BDO’s discount rate sensitivity analysis down to 7.5% results in an NPV of ~ $615 million for the Kalkaroo project. [FWIW this is ~ $200 million less than the post-tax NPV7.5% at consensus prices in the 2021 Annual Report. This is likely explained by updated capex and opex data used by BDO.]
Below is an extended discount rate sensitivity table:
![]()
At $205 million, OZL would be acquiring the Kalkaroo project at a significant discount to NPV.
Contingent Consideration (pg 44)
• $65 million cash upon a 30% or more increase, based on in-situ copper tonnes, in Measured and Indicated Mineral Resources in respect of the Kalkaroo Tenements when compared to the current Measured and Indicated Mineral Resource;
• maximum payment of $135,000,000 on copper prices above US$10,000 / tonne.
The first contingent consideration amount relates to additional resources not currently included in BDO’s NPV calculation.
The second contingent consideration amount is dependent on the copper price exceeding US$10,000 / tonne. The highest copper price adopted in BDO’s NPV calculation is US$9,500 / tonne (pg 69).
The above extended table is repeated below for $405 million (i.e. including contingent consideration):
![]()
IMO based on BDO’s NPV data, the preference would have been for OZL to pay the whole $405 million upon exercise of the option rather than ~ half being contingent. It is what it is.
Superior offer
There is a month to go before the EGM. IMO, due to the geopolitical environment brought on by the Russian thug, the expectation of an incoming superior offer now is less than a few months ago when copper prices were above US$9,000 / tonne. But not ruled out.
Not advice. Vote your own way.
DYOR
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