Ann: Trading Halt, page-34

"my general rule of thumb for (FAIR VALUE) S/P as a function of NPV is as follows.
1) SS/PFS performed, no offtakes, no finance = 10-20% of NPV
2) DFS/BFS pilot plant no offtakes no finance = 15-30% of NPV
3) Either of the above with offtakes secured = 25-40%
4) Any of the above with finance secured = 35-50%
5) in construction near term production = 50-75%"

IMO, post SS and an MOU (presumably) i'd be comfy with 25% of NPV moving to 35% or so if the offtake was landed etc. Depending on what production throughput you use that NPV can change but i'm fairly comfy that at 3660 tpa (y7 production profile) and a rough profit margin around $30-$35 = 100M USD p/a profit.

Apply your own discount rates, initial capex etc etc for discounted FCF or alternatively use P/E ratio methodology but i think 1bn USD is the lowside project value maybe 2bn on the upside for Y7. (which noted is a while away). Strategic operations are worth more hence why lynas is valued at a 40-50 P/E ratio.

But irrespectively at current we are maybe only 10-15% of project value (taking account 60% ownership). So a 25% valuation post these 2 news pieces would seem to correlate to around that 8-10c mark.

This doesn't guarantee it, but i just wanted to talk out my headspace on paper to see if it made sense. So i think a MC at the S/P would actually be supported pending the SS does delineate an NPV or annualised profit similar to what i've details and if the MOU lends itself to what we could anticipate to be offtakes in the near future.

Looks good, certainly happy to be surprised and generally why i am conservative.

SF2TH


Important to note that an MOU doesn't guarantee an offtake but it increases likelihood.