I thought it would be good to post about the fundamentals of AUZ and also try to clear up some of the conjecture surrounding the directors getting financial assistance as well as placements that was passed in the most recent AGM.
Firstly lets look at the financial assistance and placement to directors recently approved in the AGM; I think this was a great way to remunerate the directors as well as get them more skin in the game to ultimately deliver SP performance to all of us shareholders as well as minimal dilution due to their large amounts of holdings.
Now to get over the conjecture we must look at the notice of AGM ann on 13/10/2017, I have posted it below and highlighted 2 key points
- They cannot access the placements until 50% on June 2018 and then 50% on June 2019
- They must also pay 30% premium to the market
What this effectively is, is an interest free loan to the directors of which they must pay back to the company to give skin in the game and align their interests with all of us! The company may issue more equity however it will receive a receivable at 30% of a premium to the 5 day Vwap
View attachment 834521
Now lets get to the fundamentals and outlook over next 12 months! I will do this in point form so we can cover the most important things
- Firstly Sconi and CLQ Flemington are very comparable with Sconi Arguably slightly ahead in development due to flemington being a Laterite Deposit (High Capex), Similar resources Similar timelines 1/3 of MC
- Samples sent to 9 potential customers from Sconi, We could have an offtake with some financing (not all, there will have to be a debt/equity split for full capex) before xmas - the would is need of a quality supply without sovereignty issues (DRC)
- Financing will easily come because of the BFS being built for Sconi for delivery in april next year, this BFS for Sconi will have huge upside from the PFS that was developed in 2012 by the previous owners of Sconi. The NPV of a PFS for sconi developed in 2012 had a value upwards of 700 Million; now see below why this will have significant upside in the BFS;
- AUD/USD rate was 90c in that PFS, long term ex rates used now in studies is 75c - this allows already an upside of 15-20%
- Output for Nickel and Cobalt will be quadrupled as per emails from Ben and ann's by the company to take into calculations
- Pricing for these have increased and the macro effects of the EV revolution will enable upside to the margins
- This BFS that is due could produce a NPV of 1 Billion alone just for Sconi, this is without even talking about the flemington deposit which will rival CLQ's Deposit as we have only drilled 1% and imaging has concurred the Ore body does continue throughout the AUZ tenement and only seperated by a fence.
In conclusion I will never talk in terms of SP as that has many factors to it, however currently our MC is $250 million, I think the next 12 months could be very rosy for AUZ holders. If the BFS shows an NPV of 1 Billion plus I think our MC could operate at a 30-40% discount to that which is an easy 100% between now and april. If we get an offtake (derisking the project) that could easily add 10-15% to the MC in the short term.
Long story short in my opinion and my opinion only I believe AUZ has a bright future over the next 12 months and can see a MC of $750 Million (conservative) in 12 months based on the following
- BFS of Sconi with a NPV >1 Billion
- Drilling at flemington confirming similar deposit to CLQ
- Offtakes and financing derisking the already well advanced Sconi project.
- Macro Pricing effects on Nickel,Cobalt and Scandium due to the EV revolution that is happening right now!
- Huge skin in the game for directors with aligned interests with SH's
This is all IMO and please DYOR
Feel free to critique and question any analysis
Good Luck all Holders! Hopefully a fruitful and 200-300% return over the next 6-12 Months!
And if you don't like 200-300% feel free to hit the asx 200 with the 5-15% long term returns - there might be risk in AUZ but the upside potential is HUGE!
(20min delay)