Valuation and Developments, page-2

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Pucklechuddings

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12/10/17

15:17

Post #: 27858102
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Originally posted by Kevyx ↑

Just a quick NPV calculation based on the potential resource and exploration targets over at our Manano/Kitolo Project (60%).

Note* it uses many many many assumptions.

Calculation Assumptions:

- Lets assume 1.2bt resource @ 1.25% li20
- Lets assume a 16mtpa plant
- Lets assume a 750mil capex for the plant

Which gives us a 1200mt/16mtpa = 75-year mine life

16mtpa @ ~65% recovery => ROM:Spod conversion ratio of 8:1 (from 1.25-1.5% Li2O head grade feed )
= 16mtpa/8 = 2,000ktpa of ~6% spodumene.

Assume direct opex: US$250 (excl. byproduct credits)
Assume indirect opex: US$200 (High figure due to transport/power costs in a third world country. Birimian PFS confirmed this possibility)

Selling price (conservative) for 6% Spodumene: US$900

Cash flows per tonne of product sold $450USD

Cash flows p.a: 2,000,000 * US$450 = US$900,000,000

NPV at 8% discount over 75 year mine life: US$11.2B - initial capex = US$10.45B
NPV at 10% discount over 75 year mine life: US$8.99B - initial capex = US$8.24B
*Note: only 60% of the NPV is attributable to AVZ due to our ownership percentage of the project

This confirms the massive valuation of the project that exceeds the combined NPV of all currently proven lithium mines currently in Australia (Greenbushes + Pilgangoora + Mt Cattlin + Earl Grey + Bald Hill.... you get the idea).

Personally, I feel like a farm out to companies with existing mining experience in DRC (Huayou or the like) wouldn't be a bad idea just because of the substantial cash flows the project can generate in production. However, I am aware that Klaus may not be that kind of businessman but I trust he will seek to maximize shareholder value (himself included).

The Ann I would most like to see now is a 10 million dollar drilling campaign to realize a portion of our exploration target as a JORC resource. 5 drills on site and 100+ holes in the ground is the first step to increase project value (and share price)

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Nigel reported they have gotten between 20% and 25% spodumene today in his investor presentation.

AVZ Price at posting: 12.8¢ Sentiment: Hold Disclosure: Held
22 Upvote

0 Great analysis

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Valuation and Developments, page-2

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Listen: HotCopper Wire Podcast 017 – RBA holds the toppings

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