RE: NPV11 Jul 2025 13:55
the pfs gave out a post-tax npv of $482mn. that is the basis around questions about the value mismatch to the mc of bres these past 3 years.
a $1bn+ npv, if it is justified by the new jorc numbers to be released later this year, should start ( or jumpstart) the process of narrowing this value mismatch, which will have grown since the pfs rns.
why?
1. because trade buyers of graphite will have been underwhelmed by the initial numbers. as mr has explained on many occasions, graphite is a tough market to enter as a new supplier. the flake produced is not of a ****geneous character. different thickness flakes go to quite separate end users. and the ev market demands a 99% purity flake of a certain consistent charateristic. proving this up to various users is both a necessary and lengthy process, but largely done now by bres, passing all tests for suitability. informed investors in this space will have held back no doubt, because of this lengthy and rigorous process.
2. financing. bres couldn't raise large $ sums given its minute mc, without excessive dilution. all credit to the bod in getting financial assistance from the dfc without equity dilution or debt. but nevertheless , regular small placings have made investors wary of chasing momentum, for fear of the next top-up placing. against that, insiders have made largish co-investments with every placing, giving encouragement to pis they the directors really believe in the value of this project.
so, according to mr, we stand now at the point of a major inflection point in value recognition. for this to materialise, rather than being another catch-phrase without substance, bres needs to firm up the jorc numbers to make oc truly a world class tier 1 resource. and it needs a capital injection into the operating entity at oc from industry partner(s), to kick start the pilot stage of production and demonstrate to the graphite sector that oc is here to stay and has the capacity and capability to ramp up to 50,000tpa+ in the years ahead.
i believe these two key events will happen, and quite possibly both now will happen before year-end. that's a minimum expectation. on top of that we have the potential for a large graphite user coming along and offering to fund the p2 ramp-up stage soon after that, given the supply/demand pressures that will happen over the next several years (mr mentioned a global growth in demand of 500k tpa, requiring 10 ocs at full production just to capture the new demand).
so i'm in, and i have been adding regularly at these levels or lower. my holding period will be 1-year+ and then re-assess how bres has kept to its plan. gla.
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