Hi @jackal43 I've run similar scenarios, and got pretty good...

Hi @jackal43 I've run similar scenarios, and got pretty good numbers, so good I thought the same, "something must be wrong with my calcs". Would love someone to shoot some holes in the following, because like yourself I keep thinking what am I missing!

Discount rate of 8%
Tax holiday 3 years then 25% thereafter.
AUD/USD exchange rate 0.72
Sale price 6% conc. 905 USD/t constant for LOM
Conc. feed capacity 250 tph equating to 1.9 Mt/y feed (31% online time in 2017, followed by 87% online for LOM)
Assume capex of 140 M USD
Assume opex of 409 USD/t conc. produced.
Assume 10Mt @ 1.50% Li2O and 5Mt @1.50% added to ore reserves in 2017 and 2018 respectively.

The above yields a 17 year LOM and cumm. DCF of 1,206 M USD

So if we consider a JV arrangement we would need to discount the potential value in return for the JV partners assuming part of the the risk and stumping up the capital.

Lets say for arguments sake we apply a 50% discount to the above cumm. DCF, and we bring on Mali govt. (and give them a 20% discount to the JV issue price for expediting the project approval process ) and 2 other JV partners (not necessarily Chinese, could be Europeans wanting to tie up supply).

So 1,206 x 50% = 603 M USD and one of the scenarios I've run is the following JV arrangement :

BGS 70% (218 M shares)
Mali Govt. 10% (31 M shares for 48 M USD and issue price 1.65 AUD/share)
JV partner A 10% (31 M shares for 66 M USD and issue price 2.06 AUD/share)
JV partner B 10% (31 M shares for 66 M USD and issue price 2.06 AUD/share)

Potentially this means for BGS' stake in the deposit:

Capex of 140 M USD funded by JV partners, surplus of 41 M USD to BGS revenue.
Ongoing BGS opex requirement of 108 M USD/y or 286 USD/t conc. produced (based on 70% of project opex)
Revenue to BGS of 241 M USD/y or 905 USD/t conc. produced (based on 70% of project revenue)

The yields a BGS cumm. DCF of 975 M USD, which is still pretty good, to state the obvious.

At first glance I was thinking BS, because 70% of 1206 USD is 844 M USD, but take into account BGS would not have to stump up any capex funds (140 M USD), and therefore the cashflow for BGS in the first couple of years is not impacted by capex requirements. Anyway, I'm comfortable with the maths.

My preference is for ongoing fully franked dividends as opposed to a one off special dividend so I did the following calcs.

Average annual BGS DCF of 64 M AUD or 0.29 AUD/share based on 80% of annual DCF paid out to dividends, and 218 M BGS shares.

"Theoretically" this equates to 5.84 AUD/share based on 5.0% dividend yield.

This is all hypothetical because I don't know what goes on in the BOD's minds, or what offer has been tabled, or how insto's would view the above P/E scenario. It is my fervent hope that come Wednesday or soon after the above scenario begins on a path to reality. That's why I'm NOT going to be selling the kitchen sink at 1.00 AUD/share, let alone 2.00 AUD/share.

So, fire away amigos !! Good luck to you and yours!