RE: Hello again6 Sep 2025 13:25
Opinion & Recommendation - The securing of a $5m grant from the DFC is a commendable achievement for Blencowe and significantly reduces financing risks at OromCross. We have re-calibrated the PFS published last year from a NPV8 to NPV10 to reflect a higher cost of borrowing world (from $482m to $402m) and applied certain development/resource (30%), finance (12%) and country (25%) risk factors.
The impact of the DFC grant and potential for it to lead to securing project construction funds has resulted in our finance risk being slashed from 40% to 12%. By applying all these risk factors to
our NPV10, we calculate a valuation of $185.7m, an increase of 46% on our previous
$126.5m estimate.
Using the current no of shares in issue and 100% project interest this would imply a price per share of 73p (prev. 59p). If we factor in the impact of possible share dilution over the next 24-months, we arrive at a 46p valuation.
Taking an even more prudent approach and assuming Blencowe ends up with a 51% project interest if a JV partner was bought in, then a 23p value is calculated. Although if the DFC provides significant debt funding to construct a mine, such a severe project dilution may not be needed, instead a smaller valuation adjustment would be made according to the impact on future cash flows from whatever
potential funding solution is provided.
Further upside, which is not factored into our estimates could come from an improvement in the resource size to increase mine life, higher p.a. production volumes and building of a downstream processing facility.
The latter of these enhancements is the most exciting and possible now with the financial muscle of the DFC, whose involvement now has potential to elevate the project nearer a telephone number style valuation.
With all the above thoughts in mind, we recommend the shares as a ‘Buy’, with a price target range of 23p to 46p per share, both of which are much higher than the current share price of around 5p.
New note would be interesting
Graphite price and macro has changed a lot in 2 years 🤔
Also a lot more drilling data
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