It's given me some things to think about and I've done a bit more reading about the art of valuing a company.
There are so many fine print and exclusions to take into consideration which all make a difference.
For example.
NPV value is Pre-tax
AGY will never own 100% in Puna.... at most 90% and that will only happen AFTER the 10ktpa funding.
We do not know yet how the remaining modular plant will be funded or when.
As mentioned before, the byproducts has not been included really and I'm sure they won't be leaving money on the table
25% Tax rate.... in many calculations this is not taken into account together with the 90% only ownership
3% Royalties on realised revenue... not sure who this is payable too
For the US$141M capex for the 10ktpa plant there is an 18.4M contingency... so it could cost less than $141M... maybe.... these things tend to overrun though in my limited experience.
What overhead or maybe even benefit, there are in the modular approach. ( learn from your small mistakes! )
Potential to increase JORC from current 245,120t to between 507,000-721,000t.
An increase in JORC would mean a target to increase annual production to I guess at least 15,000ktpa... and if I read the quarterly correctly it said that "A Preliminary Economic Assessment for the 10,000tpa scale operation was completed inNovember 2018. Pending receipt of all regulatory approvals/permits, Argosy will considerdeveloping the larger scale operation up to an additional 10,000tpa.". Does that mean they would aim for 20,000ktpa? or just a faux pas....
So it's not easy getting all of these moving parts together nevermind the market forces.
It seems you all agree that NPV is not a tool you would use to value the company. P/E of course has it own problems....
I see you all use a P/E of 15? Where does this come from? The S&P/ASX 200 index average is 5.7 Specialty Mining & Metals industry is 6.8
Also, are you using basic EPS or diluted EPS?
We have 1,250,271,704 shares on issue. 5,000,000 - AGYAB Share Appreciation Rights exercisable at $0.22 expiring 28/02/2022 115,384,578 - Unlisted Options exercisable at $0.25 and expiring 29 October 2022 39,334,337 - AGYO Options excercisable at $0.20 and expiring 31 March 2022
That means a potential 1,409,990,619 shares on the market by 29 October 2022..... who knows if that will happen. Only if the share is appreciably higher than $0.25 .... at which stage I'm already smiling.
I'm going to put working out the weighted average shares on market and diluted EPS into the .... " too hard " basket.
Let's assume then that the price is $15,500 and we do 10,000ktpa
Direct operating cost US$4,309/t
3% Royalties on realised revenue
My calc shows $107,290,000 pre-tax net profit. If used on $13,000 price it comes to $79,650,000, which is higher than their $74M so I'm still getting a higher number because I'm not including other costs like "sustaining capital" etc etc.
Conversion to current A$ value US$107,290,000 / .76 = A$141,171,052
Minus 25% Tax A$141,171,052 * 0.75 = A$105,878,289 - after tax profit for Puna A$105,878,289 *.90 = A$95,290,460 - after tax profit for Argosy
A$95,290,460 / 1,250,271,704 = 0.07621 EPS
"Forward" P/E" based on EPS and representative sector / peer P/E
Type
P/E
EPS
S/P
Shares on Issue
MC
1
ASX 200S&P/ASX 200 index average
5.7
0.0762
0.4344
1,250,271,704
A$543,155,622.00
2
Specialty Mining & Metals industry
6.8
0.0762
0.5183
1,250,271,704
A$647,975,128.00
3
??
15
0.0762
1.1432
1,250,271,704
A$1,429,356,900.00
NPV10 in the PEA for 10ktpa @ US$15,500 lithium price was US$580M ( A$763M ) Of course that is pre-tax and with 100% ownership etc... not representative of the real figure which gives us A$515M when taken into account.
Please have a look at the above and comment.... maybe suggest a reasonable forward P/E ratio based on peers or something else?
There are a few things that this does not include, that I'll mention again.
Any success in the TLP site
IP .... ( I think Jerko said and one stage said ... paraphrased.... "Argosy is not a mining company, we are a chemical processing company" )
Applying the success formula on another site ( TLP ) or wherever....
(20min delay)