Hi @paulgf. Yes I have taken the ownership into account when...

Hi @paulgf. Yes I have taken the ownership into account when calculating the EV % of NPV. I have amended my summary spreadsheet below to include the ownership column (the underlying spreadsheet has 70 columns so I can only show a fraction here). There is both "current" ownership and "up to" ownership ("up to" is based on achieving certain milestones). For the purpose of the calculation I use the "up to" figure as I assume whatever milestone it is dependent on is achieved.

In this version (just out of interest) I have added the "% of PE Value" which indicates what the current share price is compared to what it could be once in production based on a PE ratio of 18. For GLN this indicates that the current SP is 8.3% of what it could/should be once in production (i.e. the SP should increase by over 10x by the time production comes around). Notice that there is still room to grow for AGY whereas LKE is sitting at 100% (i.e. LKE is fully priced all the way to production based on 25ktpa - I know they are talking about producing more).

However, the problem here is that all these companies need to raise funds to pay for the capex before they get into production. So we need to take the dilution into account - this is what the last column does. The last column shows how much upside there is when getting into production after additional shares are issued to raise the funds for the capex required to get to production. I usually assume 50% debt finance unless there is some other reason for me to believe that it could be more or less (refer to the "Debt Finance" column). In LKE's case they reckon they can get 70% debt funded (so I'll just go with that) and AGY will start to produce 2ktpa before they expand to 10ktpa so they can use the profit from initial production to help fund expansion (I haven't looked into this too much so take 80% with a grain of salt). The dilution is assumed to be at the current share price which provides a very conservative estimation for GLN where the SP is likely to appreciate significantly in the lead up to the DFS and before equity is raised (hopefully we are raising at over double the current SP). When looking this column you can see the impact of dilution on LKE is minimal because of the 70% debt to equity ratio (not sure how likely this is???) but also because their MC is so high that the dilution required to raise the capex is minimal (they also have the best capex to NPV on here). Whereas, the impact of dilution on VUL is quite significant given that their capex is gargantuan and if their SP continues to erode the problem only gets worse.

It's comforting to see that GLN tops the charts in every single one of these measures.



The majority of this post is not directed at you Paul (I know you fully understand all this) - it's more for others that might be coming up to speed on this stuff.

ALL IMO DYOR.