AVM shares - Undervalued bargain at this SP.

Graphite price:

Using the % breakdown of SVM's flake sizes, I get a price of just over $1200 per tonne. This does not include super jumbo flakes (larger than +38 mesh) which make up 14% of SVM's graphite and would fetch a higher price still. In any case, $1200/t is the assumption used so far by the company and brokers, so I am happy with that.

Based on 2017 prices from Benchmark mineral resources)
+50 mesh= $1525/t
+80 mesh = $1100/t
+100 mesh = $950/t
-100 mesh = $750/t
(amorphous = $400 ? only 5% of  output).

With a crazily low CAPEX of 29m, $1200/t puts the EBITDA at 43.5m with a payback of 1.1 years and a NPV(10) of 135m or 40c / fully diluted share.  Note in this analysis by Ryan Armstrong @ Taylor Collinson, he has used a higher CAPEX of 36m - https://www.taylorcollison.com.au/wp-content/uploads/2017/05/SVM-Research-May-2017-

That's a 233% return based on fundamentals. Even allowing for a further 30% risk, it is still 133% return at today's SP.

That's attractive, but AVM has the lowest graphite play OPEX and CAPEX and this makes it low risk both in the financing of the project AND in sensitivity to the price of graphite.
Financing 29m to get the mine running is straight forward.
However at $300/tonne production cost, the opex is what makes this a safer bet. Even if the price were to drop to $800/t, the project will still be paid off in a lightning fast 2 years and an EBITDA of 26.6m.

Even on this scale, the opex is comparable with giant Syrah. But price/t would be higher due to the bigger flake sizes.

Put this against a backdrop of masses of EV models from all major car manufacturers coming onto the market from 2020. If the price of graphite were to rise, with further drill results and only approx 30% of the resource currently being used in the project, there is also scope to increase the output in future if indicated.

An absolute bargain at this SP. Look for the shares to hit over 25c this yr...