The market is currently factoring a few things in for that particular company..
1. The difficulty it will have capital raising 896million to start production, as per their 17 july announcement.
2. they have an NPV of 1.4billion, and a capital cost of 896 million... This ROI is impressive (56%), IRR(23.4%) but its a long term gain for what could be a lot of pain between DFS and actual production
3. profit of 210 million pa is impressive but that means its 5yrs to payback.. Thats a long time in commodities, look at LYNAS and what happened to it.. it originally had a payback of 1 year.. thats all changed, Commodity prices can slay market cap.
4. Commodity prices have been falling, thus funding even harder to find.
All in all though an interesting stock, highly promising resourcen with longevity (100+years), which means they can expand their operation once the initial hurdle is passed (finding the 896 million..)
I also see they are working on capital reduction, which should help.
7million market cap is pretty harsh IMO but there is no way the valuation of this company should be 1.4billion until production starts and money actually rolls in. Far too much risk until then.
GCN Price at posting:
1.7¢ Sentiment: None Disclosure: Not Held
