TALGA GROUP LTD (ASX:TLG) - Future revenues - Discussion, 67056767, page-7 - HotCopper | ASX Share Prices, Stock Market & Share Trading Forum

Originally posted by HG64: ↑

Fair price projection based on EV/EBITDA ratio for Nunasvaara South only (19,500 tonnes production)

As the DFS dated 01/07/2021 predicted the total EBITDA for the 24 years life of the mine with US$4,081 million, I did a calculation based on the widely used EV/EBITDA ratio.

My calculation is based only on the Nunasvaara South mine (for a production of 19,500 tonnes of active anode material per year). So it is a price forecast for the near future, after permits and financing.

My calculation assumes that the project (mine at Vittangi and anode plant at Lulea) will be financed completely by loans and possibly EU Green Deal funding, no JV partner and thus no further dilution.

However it is unlikely that a new project will be financed completely by loans. I did a google research into project financing. It seems at least 20% equity is expected.
So TLG may have in the end only 80% of the earnings but also must finance just the 80%. I have indicated that below.

Talga EV to EBITDA calculation based on DFS
$-values are in million US dollar
1
EBITDA [1]
0
2
x10=EV [2]
$1,700
3
- net debt [3]
$580
4
= MC [4]
$1,120
5
/ # of shares [5]
360.63 million
6
= fair share price
USD 3.105
7
x exch. rate 1.50
AUD 4.66
80% of AUD 4.66 =AUD 3.72

Annotations:

[1] As per DFS of 1 July 2021 Vittangi is projected to generate US$4.081 billion in earnings before interest, tax, depreciation and amortization [EBITDA] over a 24-year life of mine.
—> EBITDA per year on average:
US$4.081 billion divided by 24 years isUS$170 million

[2] A healthy EV/EBITDA ratio for a company is less than 10. It can also indicate that a stock may be undervalued.

[3] Estimated capital expenditure of US$484 million plus US$44 million contingency (9.1%) and owner’s costs with additional equipment and processes aligned to latest product requirements of Tier 1 EV battery customers and expanded infrastructure to support future Niska expansion - as per DFS.
Total: US$528 million
Inflation +10% = US$580 million

[4] EV (enterprise value) = MC (market capitalisation) + net debt (total debt less cash and cash equivalents)

[5] Shares on issue: 360,634,172
source: www2.asx.com.au
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Good logical calculation, well done. Just a minor suggestion on the 20% equity dilution assumption, the company can just do a new capital raise later this year (after obtaining permit and offtake agreements) when market cap is expected to be close to $1b, a dilution of 10-15% should be sufficient to cover the 20% capital contribution in project financing. Less dilution means final per share price should be around $4 mark, according to your calculations.

No.	Vol.	Price($)
1	9998	62.0¢

No.

Vol.

Price($)

9998

62.0¢

Price($)	Vol.	No.
62.5¢	5000	1

Price($)

Vol.

No.

62.5¢

5000

No.	Vol.	Price($)
1	9998	0.620
2	14618	0.615
3	26618	0.610
3	16270	0.605
4	164618	0.600

No.

Vol.

Price($)

9998

0.620

14618

0.615

26618

0.610

16270

0.605

164618

0.600

Price($)	Vol.	No.
0.625	5000	1
0.630	11331	2
0.635	19563	1
0.650	8273	3
0.675	2000	1

Price($)

Vol.

No.

0.625

5000

0.630

11331

0.635

19563

0.650

8273

0.675

2000

(20min delay)
Last 62.0¢		Change -0.030(4.62%)		Mkt cap ! $235.4M

Open	High	Low	Value	Volume
62.5¢	64.0¢	61.0¢	$421.3K	674.2K

Good logical calculation, well done. Just a minor suggestion on...

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1		EBITDA [1]	0
2	x10=EV [2]	$1,700
3	- net debt [3]	$580
4	= MC [4]	$1,120
5	/ # of shares [5]	360.63 million
6	= fair share price	USD 3.105
7	x exch. rate 1.50	AUD 4.66

Good logical calculation, well done. Just a minor suggestion on...

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