["Foster Stockbroking don't get their performance options until...

["Foster Stockbroking don't get their performance options until the SP has a VWAP of above 15 cents for 2 weeks before November"] -

I had completely forgotten about that performance clause - thanks for bring it up and reminding us about this silver lining.

In a different thread, I had presented a method used by valuers to value junior miners who are not yet producing revenue, please see below:

Thought I would attempt to use one of the many accepted approaches towards valuating VR8 to FID level and see what share price I could predict.
This article: https://globalarbitrationreview.com/guide/the-guide-mining-arbitrations/2nd-edition/article/valuation-of-non-producing-mineral-properties
is an excellent resource towards explaining this methodology.

An excerpt from the above article
"For example, a variation on the market-based approach is the market capitalisation approach.[15] For public companies (and especially companies holding a single mineral property), it is sometimes possible to derive property value by analysing their market capitalisation movements during the relevant time period. The approach rests on the assumption that, in a well-developed stock market, stock price will reflect the present value of the underlying assets of the company.
A further variation on the market-based approach is the price to net asset value (P/NAV) method. The method involves a determination of a P/NAV multiple for comparable companies, calculated by dividing their market capitalisation by their net asset value (generally, the net present value of expected future cash flows, minus debt plus cash). The value of the project at issue is then arrived at by multiplying the project’s own net asset value by the P/NAV multiple."

I sifted through TMT's reports(link) to see if I could retrieve a NPV - here we go (below)
"Orelogy conducted discounted cashflow (“DCF”) analysis of the MTMP using the economic assumptions as detailed above, indicating a pre-tax NPV at a discount of 8% (EBITDA basis) of approximately A$942 million with an internal rate of return of 23%."

The VWAP for TMT is currently 0.313 per share, its MC is $65,675,086 this gives us a ratio of 65,675,086/942,000,000 = 0.0697

Bear in mind that TMT's NPV is based on a pre-tax PFS, in other words, it needs to do its DFS and reach FID.

Using that ratio on VR8's post-tax PFS NPV of USD 1.2 billion = AUD $1,690,140,845
Using the VWAP of $0.0705 for 473,512,37 SOI gives us a MC of $33,338,262 and a P/NPV ratio of a dismal 0.0197 !!

In other words, this share should re-rate a factor of at least 3.5x by the time DFS and FID is complete.

Looking forward to that 3.5 x 0.0705 = $0.25 per share.

Remember though, that this is PFS level metrics from TMT and are pre-tax, not post-tax as is the case with VR8.

If we take a closer example of AVL which has completed BFS and has marginal funding, I get a ratio of 161.5/833 (pre-tax @ 7.5% WACC) = 0.1938

This would then give us a fair evaluation of 9.81 x 0.0705 = $0.69 per share.

So, we have TMT with a MC/NPV of 0.0697 and AVL with a MC/NPV ratio of 0.1938.
Bear in mind the following, as this will materially affect the ratio for VR8
(1) Both TMT and AVL have quoted pre-tax NPVs. We all know that post-tax NPVs are very roughly 0.65-0.7 times the pre-tax NPVs (this is a very rough rule of thumb and I can state that there are a few exceptions).
(2) AVL has not only quoted a pre-tax NPV, in addition, it has used a lower WACC (Weighted Avg Cost of Capital) of 7.5% versus VR8's 8%

Looking at points (1) and (2), I would err on the side of caution and use ratios generated by TMT and AVL and apply them to VR8 thereby generating a more conservative MC/NPV for VR8.
In reality, given VR8's :
- proactive and efficient management
- very low cash burn
- very low stock dilution
- low CAPEX compared to TMT and AVL
- lowest ASIC and C1 costs of the three companies,
I would confidently put a higher ratio of say 0.25-0.26 x NPV for VR8

I like to be more conservative in my estimation as, if it turns out to be higher - its a bonus.
So, using AVL's ratio = 0.1938 x 1,690,140,845 = MC of 327 million for VR8 after DFS and FID
and if we apply other modifying factors (mentioned above), we could easily be in the 0.25 to 0.26 x 1,690,140,845 = 422.5 million MC

Therefore, the share price could be between the values of 69.1 cents right upto 89.2 cents per share.

Taking into account VR8's 74% ownership, we would simply multiply those share values by 0.74 to get our new values of $0.51 to $0.66 per share.