Hey LD good to see you around the traps.
And This is true regarding TLG grade.
Talga's grade is quite high @ 24% in their reserves and delivered a pre-tax NPV8 of US 1BN. So post-tax and converted to AUD around 1Bn give or take some change.
Meaning currently trades at 50% their post-tax NPV.
As you know Grade isn't everything - and you can still have a economically viable deposit at a lower grade.
Siviour (RNU's project) - with 8% TGC reserves over LoM - delivered a post-tax NPV10 of ~390m AUD (noting without the downstream BAM economics built in)
Meaning currently trades at 120% their post-tax NPV.
The value proposition for ITM is - what will their feasibility study deliver in terms of post-tax NPV and what % should the MC of the company be in relation to that.
It appears that CSPG economics is feasible for Campoona (stage 2 met complete) & Lacroma with stage 1 met worked in that process flow sheet as well. In terms of grade, resource size, process flow sheet, strip ratio I can see ITM being maybe not as economic as RNU but still viable, and still able to print a decent EBITDA.
Continuing with that logic further should ITM deliver a post-tax NPV of say 250M AUD for it's lacroma and campoona graphite project somewhere early next year. We'd be trading at 10% our post-tax NPV. I postulate that 30-40% would be fair at that point given advanced licensing, location, upside in resource + sugarloaf + REO stuff then = 75-100m AUD = 75c-$1
That also does not consider if sugarloaf becomes viable which would be a standalone project/flow sheet.
Disclosure i dont hold RNU or TLG but consider them both quite robust projects with a great long term investment thesis for holders. My personal preference/investing strategy has generally always been looking for lower MC co's with maybe greater risk, but hopefully greater upside.
We'll see how we go here - for the greater sector success hopefully the graphite pricing moves back north and/or some ex-china pricing starts getting published more publicly.
SF2TH
ITM Price at posting:
21.5¢ Sentiment: None Disclosure: Held
