Several ways to have a ball park stab at a valuation.
The first and easiest is the companies initial estimate on NPV for either a gas plant at $2.6 billion or Urea for fertiliser at $4.25 billion. While these are still at too early a stage to rely on the accuracy, it’s worth considering the following;
Gas prices are tipped to rise for the long term because of supply constraints and LNG export demand,
NPV is a discounted account of future cash flow after capital and ongoing expenses. There is a lot of room for error when the mc is a small fraction of potential NPV.
A second method for valuation comparison is this;
“A recent commercial transaction between Origin Energy and Australia Pacific LNG (APLNG) implied a purchase price of $1.79 per gigajoule, setting a benchmark price for gas transactions that are currently uncontracted and still in development.
Interestingly, this suggests Leigh Creek could be sitting on a resource valued in excess of $2 billion - not bad for a company with a market capitalisation of sub $200 million, suggesting there is significant scope for a rerating based on the value of the company’s assets.”
