It was good that you questioned my ball park guess at NPV. I should have checked before posting. I still haven't done that because the NPV is not just sensitive to the MAP price and the NPV is high enough above the current mc that the exact number isn't all that important until the gap closes enough that the mc is at least approaching the NPV.
It's also worth noting that the NPV is not just sensitive to fertiliser prices. The higher fertiliser (MAP) price also increases the cash cost so that it dampens the increase in NPV to some extent. I.e., the increase in NPV would be much greater if our cash cost was not also significantly affected by the rising MAP price.
"MAP makes up ~50% of the operating costs but also sets the price for theEnhanced Phosphate Rock, providing a natural hedge against operating costs." (scoping study)
The new blend that the company is working on now must be looking much better with the higher MAP price. It has the potential to allow the NPV to increase much more rapidly with the higher MAP price without the dampening effect of higher cash costs.
That's not all though.
The NPV is actually most sensitive to its "Relative Agronomic Effectiveness (RAE) of the enhanced phosphate rock in comparison to MAP on a contained Phosphate basis".
"The project is not very sensitive to initial CAPEX because the initial capital is low relative to the project value. The project is not sensitive to controllable OPEX (mining and granulation cost) because these items make up a relatively low proportion of the total cost of goods sold compared to the major input cost of purchased MAP.
The project is most sensitive to Relative Agronomic Effectiveness (RAE) of the enhanced phosphate rock in comparison to MAP on a contained Phosphate basis" (pg 46 scoping study).
So if the RAE is significantly higher by creating a NPK blend which is now what the plant is being designed for, then how much will the NPV increase by?
The FS is certainly promising to be very positive relative to the scoping study. $1bill seems achievable if using spot prices and with the combination of the NPK adding value, plus especially if the new blend is used and has a much lower cash cost than that resulting from the current high MAP price.
MAP prices will be volatile so the market is unlikely to value the project on current spot prices but the potential value add of the NPK and the potential for the new blend to reduce cash costs, especially when the MAP price is higher, means the project NPV has other options to increase significantly, other than just from the higher MAP price.
Then there's the zero carbon ammonia project.
No stock goes up in a straight line and corrections are a natural part of any uptrend but I can't see the mc staying at $80million for too much longer.
