Guys,A solid announcement from BHP, which makes sense given...

Guys,

A solid announcement from BHP, which makes sense given historical guidance from the company.

I currently value APG at 22.5c. To let you know the forecast values I have for valuation purposes (and changes from previous posts).

60k tpa plant assumptions
Total profit p.a. $31.4m
Capital Costs $77.4m
Discount rate: 10%
NPV: $124.1m
# Shares: 611.6m
Probability: 100% (up from 60% - 80% previously)

Value per share of 60k tpa plant: 20.3c per share

EARs plant assupmtions
Total profit p.a. $11.3m
Capital Costs $ 6.0m
Discount rate: 10%
NPV: $53.8m
# Shares: 611.6m
Probability: 25%

Value per share of EARS plant: 2.2c per share

Total APG valuation: 22.5c (20.3 + 2.2)

Notes:
* Gold - not included in my valuation
* Additional ERMS plants not included in this valuation; which is the ideal situation if the 60k tpa plant proves a success - plenty of potential upside if this eventuates.
* Figures are from previous Annual Reports / MD presentations.
* I still consider APG high risk, but that risk is decreasing at each stage of commercialisation.
* Based on the announcement and placement price I believe the shares should definitely be trading above 20c. I believe a good entry would be less than 18c for new holders.
* I plan to recover my investment + a small profit at a price above 20c to close out my margin loan.

Regards,
Fergus