Where are we, and where are we going?

According to submissions to parliament from the company, here is a quick summary of the vital statistics:

• 10,000 ha (the entire project) of production will require over $1.5bln of construction CAPEX over 7 years
• This will produce 125,000 tonnes of prawns per annum
• Expected sale price $10/kg
• When complete, the revenue will be $1.25 bln per annum
• Operating cash flow when complete $600 mln per annum

These numbers come from here https://www.google.com.au/url?sa=t&...253170&usg=AFQjCNGnTAWr7OGqV2GGanhdOBeb2oc3xQ

Other things we know:

• Phase one is 1080ha of grow-out, or roughly 10% of the project
• Phase one also includes the planning and development costs for the rest of the project, let's call that 20% of the CAPEX
• The company has a three-year option to buy Legune Station that expires in Feburary 2018 - the price for the station is not yet known, however it was last listed about $70mln in 2014
• In February 2015, the company estimated it would cost $21mln to reach this point - it's cost closer to $50mln, although the 21 month timeline is about right  (available at http://seafarms.com.au/wp-content/uploads/2015/02/COZ-2014-AGM-Presentation-430.pdf)
• The company intends to own 70% of Project Sea Dragon, selling 30% to off-take partners
• Has about $25mln cash on hand
• Can expect about $12mln in new capital if everyone exercises their options at 10 cents

So, through the power of multiplication, we know the company needs:

• $70mln to buy Legune by February
• $300mln for phase 1 CAPEX over the next two years
• $1,200mln over the next five years after that

Optimistically we can expect phase one to:

• Cost $370 mln
• Provide $125 mln revenue when complete
• Provide $60 mln of free cash flow when complete

I see the likely capital structure for phase one:

• $50 mln in debt finance for phase 1, secured against the station itself
• $125 mln from off-take partners
• $200 mln equity raising from the big end of town

Let's assume 6 cents per share for that equity raising - that's 3.4bln shares issued, on top of the 1.4bln already issued

The company will then need to gear up to take on an additional $1,200 mln in debt to complete the project.

So, let's say, for round numbers when complete we have 70% of $600mln (the operating cash flow above) - that's 12 cents earnings per share at a PE of 12.5, a valuation of $1.50 per share makes sense.