You will not add the value of the LAMP to market cap because it is already included in the asset base of the company ie. You got $10 in you pocket (market cap) and you spend $5 on an asset with $5 left over, you still have $10.
The market cap deals with the capital base of the company ie. How many shares etc are issued and what are they worth.
What will add to the value is the future cashflows from production because this unlocks the value of the assets and creates a flow of cash into the company.
So lets say they can process and sell 50% of the production capacity with solid forward contracts lasting 10 years (for instance).
The future value of those contracts for product are expected to come in and can be valued using a DCF (DIscounted Cashflow) analysis (factoring future product price variations).
This will add to the SP because that money will add to the capital of the company and used to generate further value for shareholders.
So once production takes place and sales happen the company SP will rise (IMO) to reflect the ROI from a Lynas share.
Ie. The SP valuation can be made with respect to its risk & return which can be compared to other investments like BHP and CBA which produce a return.
Hope that helps some..
LYC Price at posting:
$1.09 Sentiment: None Disclosure: Held
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