bell potter Valuation – risked discounted cash flow of Nachu...

bell potter
Valuation – risked discounted cash flow of Nachu project
Our MNS risked valuation of $0.58/sh is based on:

• -  Discounted cash flow of the Nachu graphite project, based on production rates of 180ktpa of graphite concentrate at total average operating cash costs of around US$540/t and CAPEX of US$205m. We have assumed operating cash costs and CAPEX estimates of around 15% higher than those used in the PFS study. We have risked our valuation by 0.7x to account for construction, development and financing risks. We have adopted a WACC of 12%, which is higher than the WACC we would typically apply to Australian based mining projects to account for sovereign risk;
• -  An allowance for corporate costs;
• -  A $27m capital raising at $0.35/sh in 2HCY2015 to take into account the project’s
  financing dilution. We have assumed a 90%:10% debt:equity split; and
• -  Bell Potter long term pricing assumptions.