It's a fair question, but, as a one-time statistician, I am nervous about giving an answer that is any more precise.
Could I put it this way? Basic costs, including mining, processing, transport to Pemba, and port costs, are reasonably easy to estimate. I have tried to focus on the low end of several of the variables involved (market share in major applications, vanadium price, take-up rates, and so on), but these are distinctly grey areas. Interestingly, mine development capex is not an issue - the payback time in virtually every case is measured in months, rather than years, so obtaining finance should not present too many problems.
If graphite prices were to drop by 30%, many current (and projected) producers would become marginal, or totally uneconomic. Not so Balama. SYR could produce graphite profitably at such levels - and at high volumes. The icing on the cake is that vanadium produces the same profit per tonne of ore, regardless of the price of graphite, so the high-volume, lower-grade products result in a dramatic escalation in revenue and profit.
This means, of course, that my results are more likely to err on the low side. None of my scenarios come out with an NPV less than $3B; most are significantly higher. The main point at issue is estimating when the high revenue from these applications will actually kick in.
So what's the net of all that? Let's just say that there is a strong chance we are on a ten-bagger, from the current price. That's good enough for me!
Cheers, Prime1
SYR Price at posting:
$2.09 Sentiment: LT Buy Disclosure: Held
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