Thanks
@Simoncho,
@GCar,
@asxDragonslayer for your good responses.
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....
- Lithium price change
- JORC Expansion / Prodution increase to 20ktpa?
(20min delay)