Here is a valuation for a Luni high grade resource of 45Mt at...

Here is a valuation for a Luni high grade resource of 45Mt at 2.5%Nb₂O₅ and 55% overall metallurgical recovery with FeNb end-product. A range of mill throughputs and corresponding opex rates are modelled, with the range providing a 30 to 20 year mine life for the assumed 45Mt resource tonnage.

The valuation does not account for the additional larger lower grade resource.

The valuation methodology is based on calculating annual EBITDA at steady-state production and using a selected ratio to covert that to market cap. A risk discount is then applied to the MC. The discount selected is intended to reflect risk at the post-MRE stage (end of June) assuming the MRE validates the resource and recovery assumptions.

The valuation, being based on EBITDA, does not consider capex, debt and equity. The assumption is that these factors are captured by the MC/EBITDA ratio. The ratio is selected with reference to a peer group of ASX miners (see below) all of which manage capex, debt and equity. Provided WA1 manages such within the peer group range, and is not an outlier in operation, then the valuation is considered adequate for an early stage valuation such as this.



Note and Comments

1. Royalties are deducted from gross revenue to give net revenue.

2. Argonaut (Jun 23) estimated opex at A$169/ t ore for 1.0 Mtpa mill throughput. My estimates are significantly higher.

3. There is a wide margin between net revenue and opex resulting in excellent EBITDA margins.

4. Opex in terms of $/t ore is likely a lot higher than CMOC and Magris, but because of the excellent Nb2O5 grade, in US$/kg Nb terms, it is no doubt significantly lower, putting WA1 in a strong position to enter the market.

5. The following graph shows my basis for selecting an MC/EBITDA ratio of 8. The average of the data shown is 7.3. I have selected slightly higher because to my mind the excellent EBITDA margins, combined with Nb’s low historic price volatility, justify a high ranking relative to peers.