Hi chaps, appreciate the content here. I'm a WA1 holder. Not a...

Hi chaps, appreciate the content here. I'm a WA1 holder. Not a mining specialist, but I have tried to piece together a crude back-of-the-envelope valuation by peer comparison with CBMM. Sources and numbers included. Let me know if anything is way off.

CBMM produced 90kt Ferroniobium in 2021. (CBMM 2021 Sustainability Report)

This equals 60kt Niobium. (FeNb is 2/3 Niobium by mass).

CBMM “Net revenue” 11.4b BRL ~ $2.4b. (CBMM 2021 Sustainability Report; I’ve not seen CBMM’s “Net” clearly defined anywhere.)

Market price of Niobium is ~$45k/t, which would give $2.7b Net Revenue for 60kt Niobium, so this roughly ties out.

CBMM “Net income” is 4.5b BRL ~ $.9b. (CBMM 2021 Sustainability Report)

CBMM pay a 25% net income royalty to Codemig (Minas Gerais); in 2021 this was 1.5b BRL, i.e. the “Net income” in the CBMM Sustainability Report has this amount deducted already. (Codemig)

i.e. true Araxa “Net income” was 6b BRL ~ $1.2b, split 75/25 between CBMM and Codemig. And true net margin is ~50%.

CBMM sold 30% at $13b valuation in 2011. (BNAmericas)

In today’s dollars, neglecting the significant production scaling, current valuation would be $19b = 29b AUD = 90B BRL.

I.e. price to sales with CBMM’s “Net revenue” of 8, price to earnings “Net income" ratio of 20. The price to sales ratio here is egregiously high for the industry, but so is the margin, such that the price to earnings ratio is reasonable.

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Let’s assume WA1 is to produce 20kt Niobium. Using the same numbers as current CBMM (bold assumption, obviously), net income $.4b (assuming no royalty), valuation of $8b = 12.3b AUD. In simple terms, 1/3 * CBMM sale price * 4/3 as no profit sharing with Codemig.

Discount this six years into the future @ 10% => 6.5b AUD current valuation.

Obviously there will be an additional dilution factor for share price from equity and debt rounds. Lots of additional uncertainty in both directions e.g. in the positive direction, jurisdiction, potentially multipolar future, additional production/industry scaling in the future (e.g. niobium oxide). In the negative direction, potential price deflation in an oversupplied scenario (CBMM nameplate capacity 150kt I believe), remaining uncertainty around metallurgy, recovery rates, margins may be lower than CBMM. Reasonable to assume a ~50% uncertainty in the valuation.

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As a sanity check, my estimate of the in situ value: 2.23 MT @ 1.46% = 150b AUD (highlights: 1.24 MT @ 2.82%). So, the above valuation would be ~4.4% of in situ resource value. Doesn't seem unreasonable. Typical in situ estimation doesn't really seem appropriate for this resource, given A. It overestimates as the total tonnage greatly exceeds an amount which is likely to be mined within a reasonable lifetime (discount) window of, say, 30 years, B. It underestimates as a high grade niobium deposit should have materially better margin / economics than a typical mine for which this estimate method is used.

(Here’s the crude in situ arithmetic, assuming s.g. of 2.8: .2km*.2km*depth (m)*2.8 tonnes / m^3 * grade = niobium (MT), summed over [depth, grade] for each 200m*200m spaced hole, using the overall numbers and the "Including" highlight depths WA1 gives (see e.g. here; I did this a few releases ago so it’s missing a few updates i.e. underestimating)).