2024 and beyond30 Dec 2023 12:51
1/2
doomed .. we're all doomed .... no one is getting their money back and the debts are dragging in more dilution.
well ... if you want to believe that then fine ... but a glance over the numbers (and indeed the nomads figures (who have access to inner workings and data) rather tells a different story.
yes .. vanadium pricing has to increase (and a fair bit for substantial profit), but is at all time lows (in real terms) and is at an unsustainable low. after all, producers will go out of business and where then will the vanadium come from .. it is in no-ones interests. indeed, the post by ls rather points to an artificial floor being proposed/built in the usa.
my back of the *** packet numbers running over 5 years point to a low end target price of between 10.1 and 15.1 and high end target of 21.7 to 32.5 with low end running a margin starting at $5 and rising to $12 in y4 and high end $9 and rising to $20. (yes i could refine based on the updated hannan figures but it would not make a substantive change), and yes, i left off the new royalty rates, but they are relatively small and a target is a broad brush anyway. i am really only interested in the bigger picture. (and by 'target' i am thinking 2 years)
note that post jan (orion signing) the first debt repayment is covered and all capex requirements, so the ai price will not be in the $35+ range (as many seem to think), but rather close to the declared cost price (a little higher as some admin costs etc will not be included), but broadly lower than the current market price .. so even if small a positive cash flow. ... my low end target would only need a vanadium average of about $33 rising to around $39/$40 in y4 .....
there are plenty of unknowns but also plenty of knowns:
1. capex funding will be in place for 2+ years
2. debt repayment for q1, 2025 is in place (next on is over 2 years away)
3. barren dam works should finish phase 1 by q1 2025 and be ready to have material uplift into h1 2025 (and most production is from mid q2 onwards anyway)
4. cost base will continue to fall as surplus staff are removed and costly intermittent pm is outsourced
5. the accretive effect of buying out bee will uplift vametco ebitda by almost 6% (effectively decreasing the cost base further)
6. post first debt repayment the gearing will be around 50% (which is when cc said he felt comfortable), and decrease markedly a year later
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