ANQ Valuation

While waiting for the upcoming quarterly and plant completion I thought I’d provide some quick ideas on a valuation for AnaeCo:

References

• AnaeCo 2013 Investor Presentation
• RM Research Analysis – AnaeCo – 1 Mar 2013
• AnaeCo Annual Report 2013
• AnaeCo Annual Report 2014
• ASX Announcements

Base Notes / Assumptions

“AnaeCo’s main product is licensing and technology transfer of the DiCOM™ System. In our model we assume that for a typical project AnaeCo will receive a one-time payment of A$16M (company provides a range of A$15M – A$20M) in aggregate for Design & Commissioning fees, supply of the Process Control System and DiCOM™ Licensing fees (Fig.4). However, we believe first revenues could also come from execution of detailed feasibility studies (DFSs) as the company progresses its business development activities (i.e. MoUs, etc).”

“We also include recurring profits in our model which AnaeCo will receive as royalties and technology support fees (we estimate A$5/tonne per annum).”

“Down the road, management is also aiming to sell regional licenses for the DiCOM™ technology, thus building the local ecosystem in these regions required to develop local projects and thereby providing the necessary scale to increase the overall momentum of DiCOM adoption.”

Annual Expenditure:

• Indirects (Core Staff, etc): $2m
• Directs (Project Delivery): $8m

Shares on Issue: 2.56b

P/E: 12 (personally I think it will much higher for this given the start-up phase of the Company, but I’d rather be conservative)

‘Typical’ Project is 50,000tpa Site (WMRC in Shenton Park is 55,000tpa)

Current Share Price: $0.004

Valuations

I’ve done valuations based on the number of ‘typical’ projects received each year:

1 ‘typical’ project:
Income: $16m, plus royalties of (50,000 * 1 * $5) = $16.25m.
Costs: $2m + $8m = $10m.
Net is $6.25m.
Market Cap (MC): $75m ($6.25m x P/E of 12)
Share Price (SP): $0.029 ($75m/2.56b shares)

2 ‘typical’ projects:
Income: $32m, plus royalties of (50,000 * 2 * $5) = $32.5m.
Costs: $2m + (2*$8m) = $18m.
Net is $14.5m.
Market Cap (MC): $174m
Share Price (SP): $0.068

3 ‘typical’ projects:
Income: $48m, plus royalties of (50,000 * 3 * $5) = $48.75m.
Costs: $2m + (3*$8m) = $26m.
Net is $22.75m.
Market Cap (MC): $273m
Share Price (SP): $0.107