We, the 10baggerclub guys have been collecting this paper since the 10-12 cent lows last march April. We are now sitting on some sweet profits of well over 1000% (already a Disallowed for most of us) but we're not selling -and we have a lot. We think this stock could well almost 10 bag again from here!
Here's why - this is just our own thesis.(Note : The figures I'm using are exactly those from the latest E25 quarterly report which are based on the DFS done by ASX approved independent experts- as in were not spruiking our own figures or making stuff up like Donald Trump. Also its based on all things staying equal as is the DFS. not Mn price falling or rising (more likely). So here we go and I hope this helps any of you holders out there see what you're actually sitting on.:
E25 is only drilled about 25% of its tenement to get its base case 40 year LOM resource . As thats long enough already! In our opinion there's probably plenty more Mn there on their tenement if needed.
1. As per the Q3 report, -Base Case One (BC1) has a capital cost of AUD 20 mill. E25 has that on hand - so by second half this year they should be doing 1.3 MTUPA and making AUD 35 million PA.- put that on a 10x pe and the market cap should be 350 mill- thats $2.60 per share. BUT this is just them getting started!
2. Base Case 2(expansion to 2.6 MTUPA) will cost only 15 mill AUD more ( and paid from cashflow from BC 1above ). And seeing how efficient and aggressive management have been to date. We think they will get right on it. -the markets there for their mN. Then they will be making AUD 73 mill pa.according to q3 report. So lets now put that on a more conservative 8x pe - which means E25 market cap should be 584mill -thats $4.50 per share.
3. So by next year mid-way which cash flow from BC2 - they can get onto Base Case 3- extension to 3.9 MTUPA- and then they project they will making AUD 117mill pa. Lets keep that on a conservative 8 x PE and market cap should be AUD 936 mill- thats $7.20 per share.
Note: our conservative figure above is far less than the independent experts BC3 case NPV of AUD 1.1 billion
We also presume growth from BC1 -BC3 can be done organically from sales cash flow so no extra shares to be issued - it can of course be done sooner if they take on any debt!
BUT IM NOT ANYWHERE NEASR FINISHED YET!.........
the above figures are only counting normal MN production for steel-(I may have some numbers a bit wrong here so please correct me anyone -im not so good at exactly pricing Manganese) but they are counting sales at USD 137 per MTU?
Do you know that high purity Mnaganese (which e25 has in abundance) after processing, sells today not for USD137 per MTU but just over USD 2000per MTU? - That's friggin 14X more for their Mn than we all, and the independent experts, are all calculating now!
The catch is that building a Mn purifying plant onsite will cost around 300 million++AUD. E25 doesn't have that money yet, and don't want to take on that much debt. -However .....
And again this is just in our opinion (10baggerclub's) E25 is an absolute prime target for the big Asian battery makers to do a JV. Their Mn is far better than EMN's - from the mettaulrgy they have shown so far its purer it separates better (at from temperature!) and it's in a reliable jurisdiction with reliable port and roads.(despite being run by aussies!)
We think its peanuts for one of the big Chinese/Korean or Jap battery makers to come in and pre-pay or /lend E25 that money to build the plant so that they can have a long term, guaranteed supply from a safe reliable jurisdiction. And we think such a deal will come sooner rather than later. probably as soon as E25 show they are producing and sending their offtake to OMH (whose share price has also rallied 250% in last month or so, maybe based on this deal?)
Of course, under asx rules E25 cannot make any forward-looking statements about such a possible deal ......until its done. So they say nothing. But we hear gossip and conjecture through the grapevine from some of our members in Perth that E25 management have already been wined and dined by more than one of these Asian companies. They are of course being totally tight-lipped about it
But if such a deal is ever announced -which could be anytime in the near future,- and we are confident it logically should be - then this SP is going way higher! Look at all the other ASX juniors after such JV's.
In summary: our target now is 5-7$ a share off current normal MN deal.
our target if a JV for the battery grade Mn is announced, is 10-12$.
And with little real downside that we can forsee right now, we're willing to sit and wait. Because in a worst case if they don't do anything, we can all sit and get 30-40%- dividends for the next 20 ++years.
That's our well-considered View.
Congratulations to the excellent management for getting this to mine with only 130 mill shares out! And Good luck to all holders. Don't be in such a hurry to take profits on this baby. Unless of course you have a better idea, and if so please let the 10baggerclub know as well be in with you big time.!
E25 Price at posting:
$1.80 Sentiment: Buy Disclosure: Held
(20min delay)