Vanadium - General/News thread, page-20

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 $3,338,262 and a P/NPV ratio of a dismal 0.00197 !!

In other words, this share should re-rate a factor of at least 35x by the time DFS and FID is complete.

Looking forward to that 35 x 0.0705 = $2.46 per share.

Treat the above with caution as its only my personal opinion and NOT to be construed as financial advice.
I'm sure similar excercises could be done with other companies like AVL so as to generate an 'average sector' P/NPV value which should probably be more accurate.