Ann: Positive PFS Results for Razorback Iron Ore Project, page-108

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Tran

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05/07/21

13:00

Post #: 54286054
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Originally posted by Tran: ↑

People dont seem to understand the figures released today and blindly give their shares away cheaply.

NPV of AUD $0.67bil (for Fe62% = USD 110/ton) and NPV of AUD $1.54bil (for Fe62% = USD $150/ton) are for current Probable Ore reserve of 473mil tons ore out of 1.5bil tons of Indicated Category resource and another 1.5bil tons of Inferred Category resource. In other words, it is NPVs of the 473mil tons of Probable Ore Reserve at 2 different AVERAGE SUSTAINED LONG TERM price scenarios (Fe62% = USD $110/ton and Fe62% = USD $150/ton), not NPV of the whole Razorback project.

Remember Razorback project = 1.5bil tons of Indicated Category resource (of which 473mil tons are in Probable Reserve category) + 1.5bil tons of Inferred Catogory resource.

Normally, NPV of a project will apply resource utilization of 100% of the Indicated Category resource and about 30% of Inferred Category resource. That would see around 1.9bil tons - 2bil tons resource utilization in applied to work out THE NPV OF THE WHOLE RAZORBACK PROJECT.

In simple maths (actual maths will be much much more complicated than you think. And I mean it is much much more complex, with so many bits and pieces need to be taken into accounts and broken down into time stages and it is beyond the scope of this post), the NPV8% of the whole Razorback project would be:

Scenario#1 with Fe62% = USD $110/ton:

NPV8% = AUD $0.67bil * (2bil tons/0.473bil tons) = AUD $2.8bil.

Scenario#2 with Fe62% = USD $150/ton:

NPV8% = AUD $1.54bil * (2bil tons/0.473bil tons) = AUD $6.5bil

Note: both scenarios are based on LOM = 23 years. So, annual production is also increased accordingly by a factor of 2000/473 = 4.2. And in that case, the actual NPV figure will be higher because ALL-IN-COST per tonage would be reduced very significantly.

In my opinion, a fair NPV of Razorback project is in the AUD $4bil - $4.5bil range.

Expand

Typical MC/NPV ratio of a project at this stage of progress (post-PFS, pre-DFS) is usually in the range of 15%-20%.

That works out a MC of around $600mil - $800mil for MGT and I believe it will get there in the months ahead. Additional % to the ratio will be realized if other factors like environmental permit, mining permit, off-take agreements, stragetic stake-holders are added as it progresses further.

MGT Price at posting: 7.9¢ Sentiment: Buy Disclosure: Held
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Ann: Positive PFS Results for Razorback Iron Ore Project, page-108

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Ann: Positive PFS Results for Razorback Iron Ore Project, page-108

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