For those new to the story or thinking of banking that quick 2c...

For those new to the story or thinking of banking that quick 2c profit, you may want to refresh yourself in respect to how sophisticated / institutional money / fund managers think when it comes to valuing resources companies as they move from an explorer to an operating mine.

From the Orior capital report, here's the slides around valuation thoughts that apply sector wide.

A couple of things have changed since this report was issued;
- The NPV for the project is now ~ US$1.1b ($1.5b AUD)
- The share price is now 14.5c (vs 4c) with an undiluted market cap of ~ $86
- The timeline until production is ~ 1yr  away

What holds true is the thought process around where a project ~ 12mths from production + once funding is finalised should trade (market cap) relative to the project's NPV.

If we use the 30% - 50% of NPV range, this would see BKT on a market cap of $450mil - $750mil and lets assume BKT may raise up to $50mil via equity to complete their funding requirements once the offtake prepayment of ~ $20mil and the TIB complete their debt funding proposal. Iam going to take that off the topline MC numbers for simplicity.

So on that basis a market cap range of $400mil - $700mil once funding is secured and BKT is 12 months out from the project coming online. This would equate to a share price range of between $0.67 - $1.18

So what does fair value look like for BKT prior to funding being completed? 10% - 20% of project NPV? $150mil - $300mil / 25c - 50c

A reminder of the near term milestones that BKT are looking to deliver:
- Posco DD concluding and a positive outcome deemed / progressing to a formal investment, DONE
- Formal investment terms agreed by both parties, DONE
- Formal offtakes received + the potential for a capex prepayment, In progress
- Government free carried interest finalised, In progress
- A formal offer from the Tanzania Investment Bank - TIB to play a role with debt funding for the project. In progress
- Finalistion of funding requirements via debt and or equity

As each of these are ticked off by management the market cap / share price will only continue to move towards the impressive project NPV of $1.5bil.

Be patient, HODL on for the ride, because from here on in this is where things start to get exciting and those that have been and can be patient will be rewarded nicely! Don't underestimate the amount of on market interest and the depth of the buying that is taking place, the big money isn't taking a position looking for a cent or two, they are wanting to capture the uplift that comes as the company moves into production!