I figured it might be useful, given the amount of updated figures surrounding production and cash costs, to perform some DCF modelling on AKE.
I've included the following in to the model: - Mt Cattlin (assumed 10 year LOM given successful drilling results - 240 ktpa spod) - Olaroz Stage 1 (15 ktpa LC 66.5% ownership) - Olaroz Stage 2 (25 ktpa LC 66.5% ownership) - SDV Stage 1 (15 ktpa LC - operational in 2023) - SDV Stage 2 (30 ktpa LC - operational in 2025) - James Bay (321 ktpa spod - operational 2024-2043)
Assumptions: - Tax rate on Olaroz and SDV = 35% - Tax rate on Mt Cattlin + James Bay = 30% - Cash costs as guided from presentation and most recent reports for each site - Discount rate = 10% - NPV@10% over 30 year horizon - First two years of DCF: spod price = $USD 5000/t and LC = $USD 35000/t. Following this I reduced spod price to $USD 2000/t and LC =$USD 20000/t for Olaroz and $USD 30000/t for SDV.
A snapshot of the first 5 years of the model is shown below with the SP estimate assuming the market cap should be aligned with the NPV. Note the drop in cash flow from 2023-2024 is due to this reversion of price achieved to a more conservative value for the sake of a safety buffer.
Hopefully this provides some insight in to the significant upside and value potential of AKE but please DYOR.
