VML General Comments - Chat, page-1817

I'll keep this short. hehe. IMV market caps of resources companies are a function of their future expected profits. Post #:50643443 explains this.

What i mean by this is, when you are an explorer or developer you will be valued on how much profit this project could yield. The market then also applies what i believe is a likelihood of success factor. This risk decreases with development and in turn company is valued closer to their NPV.

Below is
"my general rule of thumb for (FAIR VALUE) S/P as a function of NPV is as follows.
1) SS/PFS performed, no offtakes, no finance = 10-20% of NPV
2) DFS/BFS pilot plant no offtakes no finance = 15-30% of NPV
3) Either of the above with offtakes secured = 25-40%
4) Any of the above with finance secured = 35-50%
5) in construction near term production = 50-75%"

This is a very very loose way to look at it, and is purely my view btw nothing formally documented this is the case.

So your NPV is driven by your economics. Then you likelihood of success is driven by 100's of factors. I use the above as rough cut guide. Things like low capex, good jurisdictions etc can improve.


*mistake with VML opex btw i have no ideally what it will be maybe 5-10M annually,

VML's i haven't updated because i dont know the AISC and so haven't done an NPV same as REE. But one could work it out. assume 20M USD annualised profit for 4-5year then step up that revenue roughly 5-20years for stage 2. Regardless you might land somewhere in the 300-600USD mark.

If you look across the bottom most plays are between 2-4 of their NPV. i.e. 25-50%. Makes sense, most of them have done DFS/BFS, some offtakes some not.

If you work out the NPV and take the MC a function thereof VML will probably drop into a 10-20% valuation. For someone with no formalised studies on those future economics i would garner this is the reason for the valuation. on the other hand the offtake could make a case for 20-40%.
One you complete those studies have economics in line with peers then absolutely should jump up. I use the above table a sense check not a bible. So i reckon market is valuing on the stage 1 and not factoring much of stage 2 because unknown at this stage in terms of AISC revenue. but just a guess.

For e.g. pek is 3.78 so i would investigate the discount to peers and understand whether i reckon its valid or not. ASM is super low, well whats going on there are they in production shortly etc etc.

I'm not going to speculate too much on valuation as that's down to the markets interpretation. Ultimately it's what the market decides - certainly not me. I don't get how LYC is valued at it's market cap either - and if i used my methods i would never invest. It didn't change the fact is has went up 400-500%. So as i said, not a silver bullet and is purely my view on things and how i invest and determine fair and future value. VML could go to 200m and i wouldn't say it was necessarily over-valued because of the offtake agreement and potential of stage 2.

Generally everyone thinks their stock is undervalued though right, can't all be right they all don't go up but i'd rather be in VML than the rest. FWIW.

SF2TH