However, the original pre tax NPV model reflects $1.05bn for 20ktpa and $527m capex. If LPI were to double production to 40ktpa by simply building the same project twice then the total pre tax NPV would be $2.1bn (capex $1.054bn).
By comparison an extrapolation of the PEA model from 20ktpa to 35ktpa generated an estimated pre tax NPV of $4bn, 40ktpa would be even higher, possibility $5bn.
To me that doesn’t make sense. Neither does the models increase in pre tax NPV8% from $1bn to $2bn assuming a 25% increase in production (20ktpa to 25ktpa). 5,000tpa extra production at an operating margin of approx $10,000/t does add up to $1bn over 20 years, but you still need to PV that at using an 8% discount rate, the number comes to $500m roughly.
If this doesn’t make sense I’m happy to agree to disagree. The project is excellent regardless.
LPI Price at posting:
41.5¢ Sentiment: Buy Disclosure: Held
