DYOR. Not Advice.
Targets presented below are based on my research, analysis and calculations. You are encouraged to DYOR and make your own decisions.
Yesterday I heard of a $3.45 price target from Canaccord Genuity (source). Basis of this is Syrah moving to 250kt of production for 2019.
I've estimated SYY share issue at approx 401M at end of 2019, multiplying by $3.45 broker price target this gives a Market Cap target for Syrah at $1.38B for 250kt of production. On a per kilotonne of production basis this is $5.5M per Kilotonne.
Ref: BAT February 2019 presentation - https://www.asx.com.au/asxpdf/20190201/pdf/44295jvbknqwwb.pdf
Using BAT project and production ramp up plan and $5.5M MCAP per kilotonne of producton we can arrive at the following estimated MCAP multiples for BAT:
- 8.1 for end 2020
- 10.8 for end 2021
- 18.9 for end 2022
- 31.0 for end 2023
- 41.0 for end 2024
- 43.2 for end 2025
Now production profile I have used is only approximate and it assumes demand story plays out to enable BAT to grow according to this plan.
BAT assume a weighted average cash cost per tonne of approx USD $400 (from their ramp-up chart) with progressively increasing basket price.
Looking at planned production ramp-up for Montepuez Project and current offtakes, they have a gap of offtakes for Montepuez Stage 2.
Most of the key testwork with Urbix has been completed and this used Montepuez Flake. There is potential under the agreement with Urbix for BAT to produce Spherical Graphite under the tolling MOU they have with Urbix (part of the Offtake). Could be a nice way to boost cashflow for Montepuez Stage 2 from 2022.
Ref: Urbix Offtake Agreement - https://www.asx.com.au/asxpdf/20171219/pdf/43q93ngm3lqstt.pdf
Urbix also have done testwork with Montepuez flake under a US Department of Energy Grant, now Urbix are perhaps targeting their offtake graphite towards an Urbix commercial strategy involving this end-use (Nuclear Grade uses) ...?
