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Andrewf69

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23/05/21

18:46

Post #: 53360623
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Originally posted by sevo: ↑

You are now looking at around 860M shares fully diluted.

The DFS case is SOP price US$550/T, Fx 0.68 with after tax earnings $78M at steady state. 9 cents per share?

The PE for ASX resource stocks is around 18 (?).

At steady state (assuming you ever achieve this) with all your ducks lined up (SOP price and Fx), Lake Way could be worth around $1.60?

The sensitivity analysis for all these projects shows the massive impact of exchange rates and SOP prices. At a guess from looking at the SO4 analysis, steady state earnings are more likely to around 5 cents per share in the current market.
You won't reach steady state for at least 12 months.

It's fair to say the SP should creep up based on anticipated sales. Note the PE ratio for SOP stocks overseas is frequently higher than 18.

Whilst you may be happy with the above scenario you would have been even happier with 300M less shares issued!

The steady flow of new projects will continue and the SOP price may not reach some of the valuations used by some of the WA companies (at least not for bulk product which is still 82% for SO4).

If steady state is currently worth around 5 cents, a PE of 18 gives a target of 90 cents which is around the previous high. I believe earnings from lake 2 are at least 4 years/$300M+ away but there may some growth factored into the SO4 SP.

I believe there are other ASX SOP stocks that are just as likely to appreciate as much as SO4 in the short term and possibly do better in the long term providing the capital is better managed. TMG (I don't own) is sitting on a very low MC and has the second best resource in the Goldfields after Lake Way. RWD is an old story that has become stale but is massively undervalued compared to peers.

This is very simple analysis no doubt flawed in many ways. More than happy to be criticised.
Cheers

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Time to buy Sevo, join us, I’d love you on our side.

Last edited by Andrewf69: 23/05/21

SO4 Price at posting: 40.0¢ Sentiment: Hold Disclosure: Held
1 Upvote

0 Great analysis

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Time to buy Sevo, join us, I’d love you on our side.

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