E25 Strength to Strength.

Below is a snippit of a summary regarding E25 from a investors group called 10baggerclub which I think all holders will appreciate.

"Element 25 E.25AX

Continues from strength to strength. This week the co raised A$ 35.5 million more free cash from institutions to accelerate their mining directly to phase two production in early 2022. Phase 1 production will start within a week or two. According to the DFS, phase 2 production will give E25 an NPV of A$ 1.14 billion or an approximate SP (share price) of $7.60 per share.

Another way to measure its new potential value is this: By next year in phase 2 production E25 should be making around A$75 mill NPAT per year (with a 40-year mine life- which can be extended). This should allow the SP to sit on a 10 -15 x p.e. giving an approximate SP of between $5 to $7.50 per share.

Our original target price was $5 per share. However, we have now increased our price target to $10+ per share.

Why?

The extra cash flow from phase two production next year should allow E25 to organically increase to Phase 3 production in 2023 - which will produce around $90 million profit p.a. $90 million on a 10-15x p.e should give the company a market cap of approx. $900 mill – $1.3 bill – or a share price of between $6 to $8.50 per share.

Plus there is their prospective high purity manganese (HPMN) for batteries business on top of that. Part of the money raised last week is to complete a DFS for its battery-grade HPMN production this year. With that completed, we believe one of the big Asian battery or global car manufacturers should soon do a deal with E25. The deal will likely be that the big co pre-fund the HPMN plant’s Capex in exchange for a guaranteed future offtake.

For example, VW recently stated that “To save battery costs, VW shall use nickel and manganese in the cells …and do without - more expensive cobalt.” In addition Elon Musk has just stated, “It is reasonably straightforward to do a cathode that is two-thirds Nickel and one-third manganese”. But where will they all get this HPMN from?

The latest research note from Blackwood Securities, (who did the A$35 mill cap rise last week) notes, “Existing (HPMN) production is Chinese, the other possible sources are **on and South Africa. But supply chains must be strictly secure and E25 provides this security.” Blackwood modelled e25’s probable HPMN production at 200,000 tonnes per year which represent over $8 per share net profit to the co, and that would be in addition to the $6 per-share value of the expanded concentrate production.

Therefore Blackwood, and their clients, like us, also see that E25’s carbon-free Mn in Australia represents by far the safest global supply chain available to any big battery or EV manufacturers. Their valuation of $8 per share for this new HPMN deal on to of the $6 per share from their expanded normal MN production, gives them a $14 per share price target for E25. This ties in with our more conservative $10+ per share target."