If you're assuming the project goes ahead as most of us are, what's the worst case scenario (keeping it reasonable)?
Rex stays, the directors have their warning so we should at least see financing complete by late next year as that is ready to get started now with the ML granted.
Let's assume the capital cost blows out to $1 bill. Let's assume commodity prices fall back to those assumed in the study so NPV is $4.7bill. I'll assume 50:50 debt which should be worst case. I'll assume all equity is at 10-11c which should be worst case. We end up with 5.5 bill shares or a mc of $600 mill. No further shares to issue and the project is 50% paid so the NPV of $4.7bill increases to over $5.2 bill as we have already paid half the capex out of equity and the NPV assumes repayment of all capex.
So we end up with a NPV of $5.2bill versus a likely worst case scenario of a mc of $600mill. That allows the sp to rally by a factor of 8.6 times to reach NPV. That will be a very good result as a "worst" case. If we get a new chairman and get a better equity raising price or go with less equity than debt or commodity prices stay above the FS assumptions then we should be a comfortable ten bagger as long as we get into production.
TNG Price at posting:
11.0¢ Sentiment: Buy Disclosure: Held
