Tawana is still a compelling buy after the recent surge. Based on current projections on Baldhill by Canaccord, we have these astounding investing metrics -
For investors, just focus on these risks. Operating risk is well mitigated - quality of management, lithium off-take agreement, production plans on schedule and project feasibility. Financial risk appears to be fully mitigated too based on Canaccord’s financial projections and that project funding is fully secured.
- Current (conservative) base case NPV is at 78c per share
- Free Cash Flow (FCF) yield on current price is an astounding 24%
- IRR of 185%, payback within 12 months
So this makes a simple case to invest (or to add further) in Tawana at current SP.
I have mentioned on number of instances that I intend to hold Tawana at least for the medium term (3 years). This time-frame will allow for the full earnings flow of Baldhill. If feasible, during this period, the company can also fast start the Cowan project (this is a huge hidden value for Tawana shareholders).
However, there is one risk that I am wary about, i.e. the state of lithium industry. This is a macro industry risk (that leads to boom, bust situation) – that is beyond our control and has to be closely monitored.
I find it amusing for stake-holders frequently lamenting about the current SP (not reflecting the true value of Baldhill) and getting rather impatient. It is a case of perception against reality; traders against value investors. If you believe in Baldhill project, then stay the course. From my experience, value investors will always trump on a longer term basis. Patience is the key.
I quote a popular investing adage “investing requires you to look at the season, not the weather”. Remember this line.
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