Pertinent market/industry news/articles, page-876

K, IF (and that's a big IF) AUZ can pull off the debt funding required without SK coming in and positioning themselves to take eventual ownership ... well, there is so much to like about ARL it's not funny!

Firstly the BFS was average in my opinion, and I'm not going to go over there and suggest why because 'clowns often only see roses', I'm quietly confident ARL sees $1 before AUZ sees 7c but time will tell. Irrespective there currently are 3 major nickel/cobalt stocks to watch i.e. ARL, AUZ and CLQ.

The AUZ BFS when compared to the July 2.25mT concept of ARL is simply average, in fact they will have a tough time pushing this BFS at the institutional level for debt finance, even with LT maturity structures, and even with the FMG star on board - what may save them is the EV trend.

Firstly, they have taken advantage of differing exchange rates, it reads poorly in my opinion. They should have provided the base case in USD and then applied a conversion, particularly for the annual revenue/ and EBITDA in AUD. Who are they trying to kid! Go to ARL EBITDA, states $450m AUD ; the AUZ $295m.

Secondly, what makes this even less impacting of a BFS is the fact that the LOM is 18 years, ARLs is 25 years - that's an additional 7 year revenue stream.

Thirdly, you not now only have a better LOM when comparing the figures but when comparing all the above you also have a lot less shareholders to distribute these higher earnings to; ARL is theoretically 9x undervalued from an individual shareholder perspective when comparing EBITDA/ an SOI/ against the revenue stream. Also this does not take into consideration the trend.

Fourth (and I could go on but it's simply a clear cut case), the payback period is almost the equivalent of ARL, yet with again 7 years less LOM, and thus why the NPVs are vastely in favour of ARL - seriously ~$700m compared to $2.3b. And don't give me this 2mT per annum compared to 2.25mT per annum AUZ holders ... that in theory makes it worse!

I'm going to crack open a Kanonkop to celebrate the poor AUZ BFS which will help us. Look for a re-rate within 3 weeks.

Regards, NL.