@Cashmeoutside A $650m takeover. Can’t see it. With $175m debt...

@Cashmeoutside

A $650m takeover. Can’t see it.
With $175m debt that’s over $800M.
It’s not worth that at this stage of the game.

In my sincerest opinion This company will never reach nameplate and won’t be anywhere close to the costs of production they claim, not even close. I have explained why below. Let’s go with the company figures first. We all know that the reality is very different to what this company has said.

1% feed grade.
6% spod production.
A peaked output of 1.54 or nominal of 1.4mtpa.
All other producers give nominal and don’t rely on the likelyhood of over engineering.
Company says 80% recoveries, very little testwork done over the past few years and no breakdown showing this outlined like peers.

Based on company guidance this is what we get.

Best case scenario;

6/1 = 0.166 x 1,540,000 = 255,640 x .80 = 204,512 Ktpa.

Base case scenario;

6/1 = 0.166 x 1,450,000 = 240,700 x .80 = 192,560 ktpa

Nominal case scenario;

6/1 = 0.166 x 1,400,000 = 232,420 x .80 = 185,920 ktpa

So Best case scenarios well below namplate and it just drops off from there.
All cases will mean higher production costs.

Can’t find any utilisation figures in AJM studies which peers clearly state. Have I missed it?
I expect AJM utilisations to be lower because they have a Chinese sourced plant that have a reputation of being inferior. You can say this isn’t the case if you like but DYOR on that and adjust your figures as you desire if you don’t believe me.

View attachment 1308371

I expect AJM recoveries not to reach 80% but I’ll be kind and say they get to within 10% of that on what they claim is 80% recovery rate. I’ll drop utilisation rates by just 5%. Will the plant sustain the feed the company states, doubt it but we will base it on them doing so, I’m being generous here.

Best case All things considered scenario;

.166 x 1.540,000 = 255,640 x .72 = 184,060 (less 5% for 80% utilisation) = 175ktpa

Base case All things considered scenario;

.166 x 1,450,000 = 240,700 x .72 = 173,000 (less 5% for 80% utilisation) = 165ktpa

Nominal case All things considered scenario;

.166 x 1,400,000 = 232,420 x .72 = 167,342 (less 5% for 80% utilisation) = 159ktpa

Quite a drastic drop off with relatively small input adjustments which will lead to much higher production costs. I guess we can look at past performance in that case as a guide for the future. Actually no we better not do that either. My best guess for AJM annual output is around the 160-180ktpa mark.

From a 15c price point and At 25c takeover price the company is stil valued beyond $600m including debt. Right now that’s a very ambitious target but more realistic than 35c given current stage of progression. Will the share price go that low I have no idea but it can and often does go lower than anyone expects.

GLTAH