My recently updated price target (with higher production volumes) for end 2021 is AUD 3.12 or ~7.6x higher, based on 12ktpa V2O5 production. Assumes a cost of production of USD 4.50/lb and a selling price of USD 10.00/lb. Assumes a CapEx of AUD 350m.
Sensitivities: At a USD 6.50/lb vanadium selling price my target price is AUD 0.58 (~1.4x higher), or at USD 13.50/lb my target price is AUD 5.66 (~13.8x higher). So clearly the target price is very sensitive to V2O5 selling prices.
Given the good size resource and excellent current economics the stock appears very attractive at current valuation.
In my valuation assumption I have used a selling price of USD 10/lb. The chart below shows that to be quite reasonable especially given the Vanadium Redox Flow Batteries [VRFBs] boom that appears to be just at the beginning, and strong demand for stronger steel rebar requiring more vanadium. The current China V2O5 price is USD 13.90, and Europe V2O5 price is USD 14.65.
