Our new CEO's performance incentives provide a very clear picture into what is on the horizon for PM1 as it progresses through pilot plant work, Govt. approvals, DFS, engineering, off-takes, project financing and finally a final investment decision (FID).
Stephen Grocott's Performance Incentives:- The Company enters into a Memorandum of Understanding (whether legally binding or not) with a potential customer regarding nickel sulphate off-take for the TECH Project which is required to be announced by the Company on the ASX [2.5M performance rights]
- The Company enters into a legally binding offtake agreements for at least 35% of the forecast nickel sulphate production for the first > 5 years of the TECH Project [5M performance rights]
- The Company enters into a legally binding offtake agreements for at least 35% of the forecast cobalt sulphate production for the first > 5 years of the TECH Project [1.5M performance rights]
- The Company enters into a legally binding offtake agreements for at least 35% of the forecast combined value of the iron oxide, high purity alumina and magnesia production for the first >3 years of the TECH Project [2M performance rights]
- Completion of a finalised, signed off Bankable or Definitive Feasibility Study for the TECH Project by the 15th of May 2021 [7.5M performance rights]
- Obtain all regulatory approvals required to build the TECH Project before 15th May 2022 [7.5M performance rights]
- The Board of the Company reaches a Final Investment Decision to proceed with the construction of the TECH Project before 15th November 2022 [12.5M performance rights]
My guess is that a combination of milestones 1, 2, 3 and 4 will send the share price to at least 5c (>$50M MC). This will allow capital to be raised (circa $10M needed) with minimal dilution to cover for the costs of DFS work (likely to be outsourced to a major engineering firm) and engineering design work. A combination of milestones 5, and 6, will send the share price to at least 10c (>$100M MC) as we await a FID.
Lastly, once this project has secured CAPEX project financing and reaches a FID to proceed with construction (performance incentive 7), the share price should find equilibrium with the NPV of the project which should fall somewhere between $250M and $750M, as per the DFS. That corresponds to a share price between 25 cents and 75 cents at the point of first production.
For those patient enough to hold this company over the next 3-5 years, they should be duly rewarded. The nickel market is going to go ballistic over the next decade and this project will be a primary beneficiary due to its combination of technology, high grade ore supply, a location to get to market faster and a lower CAPEX, which carries lower risk than battery chemical production alternatives.
Good luck all and enjoy the ride,
T.E.P.
