im not far from you John, although there are numbers you can use rather than those you have input, For instance the CAPEX for stage one is stated, (And has been as early as February this year as 217 million including 10% contingency), However for the sake of not trying to massage the numbers lets use the full finance facility of 267 million USD, this will then cover some potential over runs, interest costs during payment moratorium, But certainly not $320 million.
in respect of income, Longonjo is not producing NdPr, it s producing 20,000 Mts MREC, said to contain 2,400 Mts of NdPr, SMM have used a value of 8.3% of the NdPr price as rule of thumb for MREC for years, this give an allowance for separating the oxides out., the 35% higher concentration of NdPr content justified a price of 12% or $9,000/MT x 20,000 = $180,000,000 per year.
OPEX, Pensan has issued numbers, but again we need to consider this is MREC. The cost of Separating the various oxides will be bourne at a later process stage, having said that i will for the sake of argument use $4200/MT of MREC (equivalent to $35,000/MT of NdPr, my own position is that you can reduce this by at least $4,000/MT of NdPr or $500/MT for MREC.
But when calculating NPV we need to consider the period over which it is calculated and the actually discount factor.The mine life is advised in all Pensana Documentation as 20 years. with 130,000 Mts of NdPr and stage 1 producing 2,400 Mts per annum. i think the 48,000 Mts of NdPr can be taken as conservative.
You use a discount factor of 10%, Pensana are using 8%, this number is subjective and is an estimate of the erosion of the value of the currency over a period and apply risk compare to other opportunities. Regarding inflation in Angola, this can largely be ignored mainly due to being linked to the devaluation compared to the USD. Which in this case is the unit of accounting currency. So the question is what's the figure to be used regarding devaiuing the purchasing power of the dollar. A year a go i would have said, the dollar getting strong, now we are in a state of flux, not knowing what is going on, but i dont beleive there is any reason not to use %8 over 10%. for further support
8% Discount Rate (Pensana’s choice), comparing with projects in similar Risk Jurisdictions
Confidence in project maturity (fully permitted, funded, construction-ready).
- USD-based accounting with minimal FX exposure.
- Strong partners (e.g., FSDEA, AFC, ABSA).
- Lower perceived execution risk due to simple geology, rail access, hydro power, etc.
Using the Above you still get an NPV that matches you own of 500 million, at todays estimated pricing,,
The numbers for Stage 2 are CAPEX 105 million, so double the revenue for 50% more CAPEX and i would certainly redo the OPEX by the 500 i suggested, this gives an NPV 40% higher at 700 million. or 1.2 billion for stage 1 and 2 combined, that is 7 x the current MCAP. All this is predicated on a static NdPr price of $75/MT. Which surely nobody believes in, Certainly not the investors in MP and Lynas. if you use more conservative Project blue forecast (rather than frothy but believable Adamas forecast) going forward to 2032, topping out at $110,000/MT and assume the price stays flat from then on. then the overall NPV increase to 2 billion or 11 x times the current MCAP or 6 pounds a share.
Of course what multiples you want to use in respect of the potential share price is a very different discussion
