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AGY

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8.7¢ argosy minerals limited

General Discussion AGY, page-21366

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Trufflehunter

3,722 Posts.

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02/03/24

11:43

Post #: 72709837
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Originally posted by Rob826: ↑

I'm keen to hear how you arrived at $5 mate. That's at least a $7b market cap, if not more through further dilution. In three years time, AGY won't even have the 10 ktpa expansion up and running.

The current spot price is around USD$14.5k/t, but let's be generous and work off a long term average sales price of US$25k per tonne. But then we need to factor in a discount for a long-term offtake. Again let's be conservative and roll with a 10% discount. As we know, nothing is perfect, so let's assume production at 90% of nameplate and keep things simple by assuming everything is battery grade.

2 ktpa Operation
US$25k x 0.9 (long-term contract discount) = US$22.5 gross revenue per tonne
US$22.5 - US$6.5 (minimum OPEX per tonne) = US$16k per tonne after OPEX
US$16k per tonne x 0.6 (~40% for taxes and royalties) = US$9.6k net profit per tonne
2000 tpa x 0.9 (90% nameplate) = 1800 tpa gross production
1800 tpa x 0.775 (AGY JV share) = 1395 tpa AGY share of production
1395 tpa x US$9.6k = US$13.392m or A$20.519m annual profit.
A$20.519m annual profit - ~A$1.5m annual costs for AGY admin/salaries/Tonopah = ~A$19m net profit per year
A$19m x 12 (assumed P/E ratio based on comparable peers) = $228m MC
$228m (MC) / 1.4b (SOI) = 16.28 cents share price

12 ktpa Operation
US$25k x 0.9 (long-term contract discount) = US$22.5 gross revenue per tonne
US$22.5 - US$6.5 (minimum OPEX per tonne) = US$16k per tonne
US$16k per tonne x 0.6 (~40% for taxes and royalties) = US$9.6k net profit per tonne
12000 tpa x 0.9 (90% nameplate) = 10800 tpa gross production
10800 tpa x 0.9 (AGY JV share) = 9720 tpa AGY share of production
9720 tpa x US$9.6k = US$93.312m or A$142.977m annual profit.
A$142.977m annual profit - ~A$1.5m annual costs for AGY admin/salaries/Tonopah = ~A$141.5m net profit per year
A$141.5m x 12 (assumed P/E ratio based on comparable peers) = $1.698b MC
$1.698b / 1.4b (SOI) = $1.21 share priceThese numbers are IMO only, but I think some of my estimates err on the optimistic side. I don't actually think AGY will consistently produce at 90% nameplate, nor do I think they will achieve 100% battery grade. I also don't think they'll remain at 1.4b SOI, as I think we'll be diluted along the way (either to fix the 2 ktpa plant or to form part of the funding for the 10 ktpa expansion). Additionally, we need to factor in the payback period, whether that is debt or pre-paid offtake which amounts to foregone revenue. Importantly, the 10 ktpa expansion won't even be built by early 2027, so I really struggle to see how anyone could arrive at such an optimistic share price of $5 in three years time.

I'm happy for my numbers to be picked apart as necessary, we're all here to learn (I hope).

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Around $1.10 to $1.50 per share doing a rough DCF with net income of ~140 million (12kta), discounted cost of equity at 9% with a terminal growth rate of 2%, with1.4 billion SOI. Back of the beet coaster stuff.

Last edited by Trufflehunter: 02/03/24

AGY Price at posting: 16.0¢ Sentiment: Buy Disclosure: Held
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(20min delay)
Last 8.7¢		Change -0.006(6.45%)		Mkt cap ! $132.4M

Open	High	Low	Value	Volume
9.0¢	9.3¢	8.7¢	$242.8K	2.698M

Buyers (Bids)

No.	Vol.	Price($)
4	277637	8.7¢

Sellers (Offers)

Price($)	Vol.	No.
8.8¢	3465	1

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No.	Vol.	Price($)
4	277637	0.087
3	548341	0.086
6	464617	0.085
3	169873	0.084
2	57062	0.083

Price($)	Vol.	No.
0.088	3465	1
0.089	73777	3
0.090	32344	1
0.091	261505	5
0.093	83631	3

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AGY (ASX) Chart

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