AVZ vs PLS

I guess what I'm looking to show here is with AVZ and PLS both having around the same amount of SOI and very similar NPV’s, AVZ should be able to reach the same share price as PLS if not exceed it once into production. People have criticized AVZ in the past for having too many SOI but PLS having the same amount have had no trouble of hitting the $1.37 today!

AVZ are still massively under valued and have a SH*T tonne of upside not included in my calculations (think higher percentage in project and hydroxide plant). AVZ should be able to work their market cap ($547M) towards their NPV ($2,221M) as the boxes continue to be ticked on the way to production!!!!

The AVZ figures have come from my calculations (*see calculations for VAT refund on last page) which are based on the recent AGM announcement that the wedge drilling will provide potential upside (see post’s #50109049 & #50208952).

The PLS figures have come from their 2018 DFS for including stage 2.

AVZ Assumptions

1.28 Year LOM

2.43% increase in LOM revenue

3.36% increase in LOM operating costs

Assuming AVZ - @ 75% project ownership

Assuming VAT Refund in full - @ $1,679,569,480.34

LOM annual throughput AVZ - @ 4.5Mt/a

LOM annual throughput PLS - @ 5.0Mt/a

PLS DFS 2018

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Comparison table

		AVZ	PLS
1	Estimated LOM	28 Years	17 Years
2	LOM project revenue (100 % ownership)	$29.8B AUD	$12.2B AUD
3	LOM project EBITDA (100% ownership)	$19.5B AUD	$6.3B AUD
4	Post tax NPV (10) (100% ownership)	$3,167M AUD	$2,160M AUD
5	Post tax NPV (10) (75% ownership)	$2,221M AUD	N/A
6	LOM average annual EBITDA (100% ownership)	$697M AUD / Year	$370M AUD / Year
7	LOM average annual EBITDA (75% ownership)	$522M AUD / Year	$ N/A
8	LOM forecast Spod price	$673.70 / T USD	$633 / T USD
9	SOI	~ 3 Billion	~ 3 Billion
10	Market cap (today)	$547M AUD	$3.621B AUD
11	Share price (today)	$0.215 AUD	$1.37 AUD

The table above obviously doesn’t take into account PLS now acquiring AJM and where that positions them earnings wise. What it does show is with AVZ and PLS both having 3 Billion SOI AVZ can achieve the same S/P value having that many SOI.

Neither does it take into account further dilution.

NOTE: For AVZ alone to match it’s NPV (75%) of $2,221M AUD from its current market cap of $547M AUD, that’s a 4.06 times upside just to match the NPV!

That would equate to a S/P of $0.87!! That’s pre-production too!

Now if you wanted to see what AVZ S/P could be @ PLS current market cap

$3.621B / $547M= 6.619

S/P of AVZ @ PLS Market cap= 6.619 x $0.215

= $1.42

Now you can do your calculations as to what your investment is worth

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*Calculations for VAT refund-

Total revenue using case 3 + 43% = $16,242,821,869 x 43% = $6,984,413,403.67

= $16,242,821,869 + $6,984,413,403.67

= $23,227,235,272.67

Total OPEX using case 3 + 36%= $5,920,124,340 x 36% = $2,131,244,762.4

= $5,920,124,340 + $$2,131,244,762.4

= $8,051,369,102.4

EBITDA= $15,175,866,170.27

Total CAPEX using case 3= $545,470,000

Gross profit= $14,630,396,170.27

VAT tax paid= $0

Income tax paid (30% gross profit)= $4,389,118,851.081

Export tax paid (5% on all revenues)= $1,161,361,763.63

Import Tax paid= $29,000,000

Total NPAT 100%= Gross profit - Taxes

= $14,630,396,170.27 - 5,579,480,614.71

= $ 9,050,915,555.56 USD