With the project now largely de-risked from a technical,...

With the project now largely de-risked from a technical, customer and financing perspective, it is now time to cast our eyes forward.

Let's investigate what level of NPV this project will likely trade at once the DFS study is complete, once the project is in construction, and once the project is in production.

I am going to estimate that it will trade at 0.2x, 0.3x and 0.5x EV/NPV respectively during those 3 stages based on other ASX comparables, which I will share in a separate post.

Based on these valuation ratios, and assuming an NPV of $3 billion AUD, we arrive at the following medium-term targets:

• $600m valuation post DFS at 0.2x EV/NPV (DFS runs from March 2021 to February 2022)
• $900m valuation during construction at 0.3x EV/NPV (construction from April 2022 to May 2023)
• $1.5 billion valuation during first production at 0.5x EV/NPV (first production slated for June 2023)

If Dr Stephen Grocott continues to execute like clockwork, the valuation of this company should continue to rise in proportion with the reduction in risk, until eventually, the company trades at close to NPV levels; aka the discounted sum of all future cashflows.

Right industry, right management, right product, right time. Luck is on our side, but as Dr Stephen Grocott often remarks: "I would rather be lucky than smart".

Fortunately for us, he is both.

T.E.P.