BSX Day to Day SP discussion, page-364

Some comments
- all is pre-tax, note that regime on upsteam (mining) is higher than the regular Vietnam tax rate. Downstream s/b regular CIT rate.
- note that the NPV in the SS is based upon 100% of the mine (reality: they own 90%) and 100% of the downstream (reality they will own 50%). So you would have to back out 10% of NPV of upstream (assuming that the minority shareholder needs to contribute 10% of capex, but I don't really know about that), and 50% of downstream. I believe Vietnam federal and state government will take royalties, rather than a manditory stake in the project. Well, it is easier for them to tax, don't be surprised if the royalty regime will be progressive dependent on material prizex (this is quite customary in Asia, certainly towards foreign companies).
- costs of mining narrow vein MSV's may not be the same at DSS's; higher grade does not automatically mean same margins, they can be higher or lower - the PFS wil have to shine a light on that
- Ecopro will have all optimised for the downstream facility, I am not technical enough what that means for economics of byproducts (Ecopro could care less). Not sure how that works processwise. They don't either, otherwise it would have been in the SS.
- Discount rate (risk) is dependent on whether Ecopro takes risk, and on what level (mining, hyodromet plant, downstream). And how this is structured. Note that upstream and downstream may (or do) have different margin profiles (and vastly different tax profiles as things stand now). Also, does Ecopro guarantee minimum offtake prices for both nickel and nickel sulphate, etc . Discount rate obviously is in function of risk.
- Typically juniors are all highly profitable, first quartile and high margin in scoping studies, and often also in PFS . There is only a few companies in the sector I trust being prudent in early stages, I would assume capex to grow in further studies. How that affects NPV really relates to how this is offset by more longevity, and uniformity of the resource. Basicly we cannot tell in this phase, since the SS probably will not resemble the ultimate project. You may attribute at least part of the share price decline to they way they (mis)handled that. That can be an opportunity or a risk, rien ne va plus

Given the amount of $ being swung into Indonesia nickel production (and Brasil to come this year), and note that high capex/high capacity projects will profit more from price increases, I am not too convinced that nickel prices will keep on going up (and, as Werner Von Braun said, everyting that goes up must come down. Well, not sure he said that, but he could have!). I think the future uptake of high nickel batteries as a ratio of the total is overestimated, certainly if input prices rise. Imho low density batteries (certainly with some improvements) suffice for a lot of applications, if they have cost (and security and longevity) advantages they will be more important than the hype is. Lowering the cost of batteries whilst assuming that input prices will rise doesn't make much sense to me. Something's got to give, even if you allow for efficiencies. Also there is room for displacement for class 1 nickel that is currently used for applications where class 2 nickel may be used. I am happy to assume a tight nickel market untill mid 20's, but not so willing to accept for the latter part of the century. So I would call for a prudent approach re. prizes, and for sure that approach will be taken by those that have to fund the project.

Obviously you can just pick the nickel prize according to the NPV you want to arrive at. Just acknowledge that higher nickel prizes will incentivize more (and sizable!) projects to come online. I am not sure that is beneficiary to BSX's cause, certainly not untill they tied down Ecopro. You don't want too many alternatives for them, right?

For HPAL/laterite haters: they reason why these projects currently are FID'ed at pace is size and longevity. Hopefully BSX can improve on those metrics. That would lower the discount to NPV, imho.