Fundamentals (New), page-205

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11/06/18

17:38

Post #: 33635263
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Originally posted by Hahahaha ↑

Hi Mr sophisticated "investor" Scholz.

There are three major flaws in your valuation I think.
1. You did not apply a discount rate.
2. Your ignored the additional financing need of at the very least 200M USD to build a 15k tpa plant.
3. You have made a very brave assumption that the JORC will be large enough to support a 15-20 years mine life.

My calculation is miles different than yours:

Assume a long term average carbonate pricing of $12,000. - Don't tell me it's too low, this is the pricing most companies are quoting in their economic studies.

Assume a JORC of 500K - This is an already extremely optimistic estimate compared to the number your most beloved poster OS has given me (he estimated JORC to be 180k-240k) to which I very much agree, but let's assume we get twice of that - 500K JORC as AGYer love to be optimistic.

Assume a recovery factor of 20% - If you read the economic assessment by other companies GXY (assumed a recovery of 15%), LAC (assumed a recovery of 17%), NLC (assumed a recovery of 20%) on their M&I +inferred resource. Rincon has a higher level of impurity so I'd expect a lower recovery as a higher % lithium is lost in removing the impurities. But because we all know PA is the god of lithium he can probably achieve something extraordinary hence I've applied a 20% recovery factor.

This will translate into a total extractable resource of 500K*20%=100k tonne of LCE. At 15k tpa production is a mine life of a bit less than 7 years, but let's be generous say we can do 7 years.

Assume a OPEX of $4000 (also very optimistic)

this is an annual NPBT of $(12,000-8,000)*15,000*90%/$0.76=$142M AUD

Initial outlay of 200M/$0.76 = 263M AUD

NPV(8%)= -263+ 142/(1-(1+0.08)^-7) = 77 M AUD

Yes, albeit being extremely optimistic in all of my assumptions, this project will delivery an NPV of 77M AUD - less than current MC, meaning a 8% negative return on equity over a time span of 7 years (before tax).

This is if AGY management is able to overcome the various hurdles to get to stage 3 and no hiccups for 7 years until the mine is exhausted....

IMO
DYOR

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Hi Hahahaha, your NVP formula doesn’t look correct. It’s supposed to be the sum of (in your case) seven years of input not one. You have only calculated the seventh year of value, missing the first six??? Please check.

AGY Price at posting: 23.5¢ Sentiment: Hold Disclosure: Held
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Fundamentals (New), page-205

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