Ann: Quarterly Activities Report and Appendix 5B, page-14

Hi @SnowStormJust to add/update your analysis (which still as @Birchcorp mentions probably crazy times lead to crazy prices ie probably well in excess to what usual valuation models would predict)

"NdPr Production 4440 ton pa

@ US$152 p/kg

= US$ 674,880,000

+ Phosphoric acid $58m

Total revenue US$732.88m

Mining costs $30m pa

Processing cost $105m pa

Admin cost $15m pa

EBITDA $US582m

EBITDA $AU814m

Current market cap $542m "
Pre-Production Capital should be increased to @spendthrift suggestion of $A1.5 bil

One has to add in Capital costs (The "I" Interest bill in EBITDA) of $A100mil (Reducing after a few years as debt is repaid, but assumption is 7%pa for 15yrs, I've posed this question before and the response to financing costs has been LIBOR + 3-4%pa)
Debt reduction - assumption $A100mil pa (15yr repayment eg NAIF and Oz EFA)
Would be interesting to find out if the "Processing cost" of $A105mil pa includes replacement of old equipment, but after a few years I would envisage the need for $A30-50miljust to upgrade/replace equipment.
So from EBITDA $A 814mil
- 100mil annual Interest bill (reducing annually by 8mil)
- 100mil debt repayment
- 50mil equipment repl (Depreciation)
= $A564mil (NPBT)
- 169mil Tax
= $A395mil Net Profit
So when it comes to Market Cap. "traditional" resource stocks
(and I know this is not a traditional Resources Co.-far from it, it is more an Industrial/Manufacturer but one has to admit it runs many of the risks of a Resources company including Resource size/extent, implementation, labour costs, Govt taxes eg royalty changes, hey even weather)
the Multiple is difficult to estimate but I would estimate that a Net Profit After Tax multiple for a 38yr mine life could easily hit 12-15X, so being conservative :
12 X $A395 = $A4.74billion as a Long-term traditional valuation at recent NdPr oxide prices of $US152/kg

This will translate to a $3.00 SP (on current SOI of 1.55 bil, assuming no further dilution - but of course there will be, ARU likely to have 2.0-2.2bil SOI within 3-5 years) so SP on traditional valuation likely to be $2.30 in 2025-2027 again based on recent NdPr pricing. Each $US10 increase in NDPr pricing theoretically should increase Net Profit by $A65mil (X 12 = $A0.78bil higher MC and $0.50 SP) BUT it is highly likely that (? 75% of) Nolans output will be sold at a Fixed Negotiated price (OffTakers) that will be be at lower than future prices of spot NdPr (give and take in getting a business off the ground)
@Birchcorp I understand that the real world (of shares/share prices) is never set in stone, and that ARU could easily take off into the stratosphere (and by God we holders want it to) but I'm also a realist and a value-orientated shareholder. Of course I still see a stack of value in ARU but there are still a lot of Risks involved in loading up on this company compared to many other Resource stocks, and when I sell some ARU stock it is to rebalance my longterm portfolio in order to de-risk it. And yes I will often then have a buy order (at a lower level of course) in my short-term/trading portfolio in order to make some short-term gains. All stocks get overbought and oversold at many points in their cycles.
Also in my earlier post when I stated
"I strongly believe we (retail shareholders) will be offered an equity raise as an eg 1 for 4 entitlement offer sometime in September as part of all the announcements of Offtakers, debt funding, insto/placement CR, commercial funders equity participation (eg options/converting preference shares) so I do advise if you are serious about contributing to ARUs success (and don't wont to have your holdings diluted) then ensure you have about half your current ARU worth (at 0.39) available to take up your entitlement in Sept/Oct (as I said hopefully a 1 for 4 @ $0.80)"
I am not implying that anyone sells their stock now in order to buyback with their likely CR in Sept at eg $0.80, I am just saying that if one is a believer and wants to contribute to ARUs future, then one should hold liquid assets (and that includes ARU shares if necessary) in order to stump up the cash for taking up their entitlement, which also would not dilute their holding. But the last thing we would want to see is every retail shareholder having to sell ARU shares in order to take up their entitlement, thus depressing the SP to possibly below the entitlement price, and just pushing shares to the instos/Lead Managers/Brokers/BEOT.
Open to having this picked to pieces. Thanks in advance. (Discl [email protected])
GLTAH DYOR and fingers crossed in the negotiations by ARU management.