Peer Comparison

Sorry for a new thread all but may add to this over time so seemed easier to do this so it doesn't get lost in the sea of posts.

Was looking at twitter this afternoon and saw an updated slide from Terra Studio today to include TLO.tsx (Talon Metals) Tamarack deposit in their peer comparison as per below.




This got me interested so I went to check out TLO. First thing to note is they are trading at A$180m.

Next I started looking into the details of their PEA. This study was done in early March 2020




As you can tell by the numbers this project is a smaller scale massive sulphide project. Upfront capex is US$219m which is better but not significantly so than BSX at roughly US$300m.

On the flip side their post tax NPV is US$291m (post tax) vs BSX NPV of US$665 (pre-tax) which should be US$450-500m post tax.

So Talon has a post tax NPV to capex of 1.32:1 and BSX is 1.50-1.67 (depending on where the post tax NPV falls).

So this addresses one of the major complaints I heard about the SS in terms of capex being high. It shows the capex is reasonable compared to a peer study.

Now the other major complaint I heard about BSX SS was the price deck used with an $8/lb Nickel price being considered the base case. At the time of the study the Nickel price was around $7/lb. As of this very moment Nickel price is $7.40/lb.

Now what did Talon use for their PEA?



They used a low case of $6.75/lb, base of $8 and incentive price of what they think Ni will need to be to meet demand needs of $9.50. So a couple points here. In early march Nickel was trading at less than $6/lb but Talon did their PEA at $8/lb. This is twice the difference to BSX which supposedly such a big faux pas. Secondly it shows consensus across market analysts that $8/lb is a reasonable forecast metal price during the time period these new developers will be reaching the market.

Talon have gone even further to suggest that $9.50 or US$20.9k will be the price we end up at (and I can't say I disagree)

So what is our conclusion:

Talon has a MC of CAD$180m and NPV of CAD$380m so is trading almost 0.5x NAV

BSX has a MC of A$120m and NPV of A$665m so is trading 0.22x NAV

IMO this shows we are trading significantly under where we should be and there is plenty of value left. This is without taking any of the easy wins we have up our sleeve into account. The complexity of this story appears to have overwhelmed some but that won't last indefinitely in my view.