KP2 Discussion, page-752

I asked ChatGPT to read the updated and optimised DFS and provide three different company valuations (all figures are in USD as per the DFS, but the last table also has conversions to AUD). According to ChatGPT we should be valued at around AUD 2 billion dollars at present. =)

My question to ChatGPT: Can you read the attached document and with consideration to the provided financial data, can you calculate a company valuation for Kore Potash, assuming that project funding in the form of debt and royalty finance, as stated within the document, have already been achieved. Can you provide three valuations: 1) at pre-construction but post construction finance approval, 2) during construction, 3) after construction and once production has begun.?

ChatGPT's answer:
To calculate a valuation for Kore Potash at different project stages, we will use the Net Present Value (NPV) method based on the financial information provided in the document. The valuation at different stages will be influenced by factors such as risk, time to production, and capital requirements.

Key Financial Metrics from the Document:

• Capital Cost: $2.07 billion (including owner's costs)
• Construction Start Date: January 2026
• Construction Duration: 43 months (~3.6 years)
• Annual MoP Production: 2.2 Mtpa
• Average MoP Price (CFR Brazil): $449/t
• Operating Cost (CFR Brazil): $128/t
• Annual EBITDA: $733 million
• NPV10% (Post-Tax, Real): $1.7 billion
• IRR: 18%
• EBITDA Margin: 74%
• Life of Mine (LoM): 23 years

1) Valuation at Pre-Construction (Post-Financing Approval)

At this stage, the project is still highly risky as construction has not begun, but the financing risk is mitigated. The valuation should reflect the NPV with a higher discount rate to account for construction and execution risks.

• Adjusted NPV (Pre-Construction):

  • A higher discount rate (e.g., 15%) may be used due to pre-construction risks.
  • Assuming the project's NPV at 10% discount is $1.7 billion, the pre-construction valuation at 15% could reduce to approximately $1.3 billion.

• Equity Valuation:

  • If we assume that the financing is entirely in debt and royalty (as suggested in the document), Kore Potash retains 90% of the project.
  • Adjusted valuation: $1.3B × 90% = $1.17 billion.

2) Valuation During Construction

At this stage, the project risk decreases as construction progresses, but no revenue is generated yet. The valuation should reflect progress while discounting the remaining construction time.

• Construction Period: 3.6 years (midpoint ~2 years remaining)
• Weighted NPV Adjustment: Applying a time-weighted discount, the valuation should increase as risks decrease.
• Estimated Valuation Mid-Construction: $1.4 - $1.5 billion (90% attributable: $1.26 - $1.35 billion)

3) Valuation After Construction & Start of Production

Once production begins, the project has significantly lower risk. The valuation should reflect full production potential at the base NPV of $1.7 billion.

• Attributable 90% Valuation:$1.53 billion
• Possible Upside: If potash prices increase above the forecast $449/t, valuation could be higher.

Summary of Valuations:

Valuation Table:

Stage	Total Project Valuation (USD)	Kore Potash's 90% Share (USD)	Total Project Valuation (AUD)	Kore Potash's 90% Share (AUD)
Pre-Construction	~$1.3 billion	~$1.17 billion	~$2.06 billion	~$1.86 billion
Mid-Construction	~$1.4 - $1.5 billion	~$1.26 - $1.35 billion	~$2.22 - $2.38 billion	~$2.00 - $2.14 billion
After Construction	~$1.7 billion	~$1.53 billion	~$2.70 billion	~$2.42 billion

*Note: Conversions are approximate and based on the exchange rate of 1 USD = 1.5857 AUD as of February 27, 2025.