I received this break down of ABR about week ago from my broker....

I received this break down of ABR about week ago from my broker.
I really like the initial Target price from ABR which I don't think is unreasonable in comparison to its peers.

Although I can't confirm I have heard that there is several firms on the sidelines waiting for final permit approval to de-risk before taking a position.
I think will see an announcement on final permit approval next week.

- ABR is developing the advantaged Fort Cady Borate Mine in California.
- In full production ABR expects to produce c. 410k tonnes of boric acid (H3BO3) and c.363k tonnes of SOP (K2SO4) per annum.
- SOP is a by-product of the production of boric acid and effectively results in a negative C3 opex for boric acid.
- Both boric acid (micro nutrient) and SOP (specialty fertiliser) play into the food security thematic as necessary fertilisers to support plant and animal life.
- The initial target market is California which is a very large agricultural market by global standards.- The mine is fully permitted to commence construction and is awaiting its last main operational permit (this is currently in community consultation phase that finishes on 24 July 2020).
- In fact, the mine operated for 6 years between 1997 and 2003 without the final operational permit. Importantly the ore body has been mined and as a result the technical risk is well understood.
- The capex for Phase One A of the Mine is only US$50m and with the recent fundraising and a convertible note from a cornerstone investor it is fully financed (c. US$60m of cash resources)
- ABR has commenced early construction and is now fully financed post receipt of the operational permit.
- ABR is currently trading at 55c / share which is less than 10% of the Mine’s NPV8 / fully diluted market cap and less than 50% of its targeted EBITDA of US$438m in full production.
- In production it should trade at an EV/ EBITDA multiple of around 10x or a PE multiple of around 20x consistent with North American producing peers (refer tables below)
- On receipt of the final operational permit ABR intends to launch an aggressive US marketing drive with a view to positioning it for a dual listing onto NYSE.
- ABR’s initial target is 33% of NPV8. This values ABR at around $2.30 / share which may be sufficient for inclusion in the ASX200. The company believes c.$1.40 / share should see it included in the ASX300.