arrowhead report $6.03 - $17.95 valuation, page-23

That's a pretty good effort LightForce.

However I think 100% debt funding is a little unrealistic.. It is difficult to get an 8% interest rate on STB's share of capex! No bank in the world will lend that much at that rate given the risks - the only way they can get this is if you have a consortium of banks, probably Chinese or Russian financial institutions as they are considered 'allies' of Eritrea (banks typically don't line up to lend to countries with UN sanctions), or an end customer willing to buy a small share (even though Lorry does not want to dilute the ownership of the project further) with a call option over the asset.. If we have a repeat GFC and potash comes back to $300/tonne, we can all kiss goodbye to Colluli as it will be sold for a song to pay the debts..

The share price is likely to rally if STB are at a stage where the project is so advanced that financing for construction is required. In this situation it is financially prudent to raise equity. So i am happy to contribute at this stage as the project will be significantly de-risked.

I have attempted to do a DCF myself and it churned out $4.75. This is actually a little tricky if you use Nevsum as a case study. The revenue, royalty & opex is very easy to model but what makes it tricky is incorporating the fact that ENAMCO will not pay for the entire amount of the 30% project value upfront (the good thing though is its based on an independent expert's valuation). I believe this has been dicussed in previous posts (sorry for being repetitive) but STB effectively gives to ENAMCO a loan for this and the cash flow attributable to ENAMCO is will be used to pay this loan down. Very tedious to work this out.

Ultimately for companies which are not production, you can plug anything into a DCF to make it look good or bad. There are so many uncertainties. I will think a DCF will be more relevant once the DFS is done. For me I will happily pay $1.18 today on a 3 year view (but will likely hold on for another month to average down cause the right's issue sellers will be here soon).