Playing with some numbers. Certainly don't construe as a formal...

Playing with some numbers. Certainly don't construe as a formal valuation and DYOR.

The numbers are rough and really just high-level analysis. I just want to see whether there is much potential for limiting further equity raises beyond any initial equity raise for working capital for Montepuez Stage 1. Also wanted to work out some price targets.

A bit bullish because I am using Basket pricing from BAT presentations ... but these numbers are based on Benchmark Minerals numbers which hopefully stack up. It would really require BAT to achieve the flake distribution published as part of the mine planning for Montepuez. Hopefully the grade control drilling will put them in a good position for mined grades to match their expectations. Paints the rosy picture as an alternative view to the Hartleys very conservative picture.

Assumptions:

• As above AUD $15M working capital (as per Hartleys) raised to kick us off. My previous thoughts on this AUD $10M to AUD $20M.
• CAPEX Montepuez Stage 1 - USD $39.5M ( from BAT presentation )
• CAPEX Montepuez Stage 2 - USD $65.0M ( as per Hartleys )
• CAPEX Balama Stage 1 - USD $69.4M ( from BAT presentation )
• CAPEX Balama Stage 2 - USD $85.0M ( my guesstimate )
• Interest on debt 10% ( RCF deal had 10% interest bill )
• Depreciation and Amortisation as a simple 10% of EBITDA
• $31M of consolidated losses which will delay payment of Tax
• Mozambique Tax Rate 32% and Mozambique Mineral Royalty 3%
• I've used Basket Prices and OPEX figures as per BAT presentation slides for Montepuez and Balama
• Share Issue growing from 1.74B in 2020 to 2.37B in 2024 ( this assumes cashflow from Montepuez and Balama will help support interest bill and progressive paydown of debt ). They may need to do smaller equity raises perhaps up to 10% dilution at a time ( but I have not modelled this in my analysis )
• Initial P/E in 2020 of 7.5 ( this is half of ASX average P/E ). Then 11.9 in 2020 as per Hartley's analysis. I then scale P/E based on EPS growth. They may introduce Spherical Graphite for further cashflow at some point in their production plan ( scoping study for this is due later in the year ), but is not modelled here.

I've run the numbers out to 2026 to get a picture of how it would look once all production stages are complete and debt has been paid off.

Production Profile




Debt, NPAT and Share Price Estimates

Surely projected NPAT is sufficient to cover the debt and interest burden shown ... ?

Debt balances shown below are cumulative with staged payback.

For clarity I have also calculated and shown what I think are potential surplus cashflows after progressive paydown of debt. Note that interest has been paid as part of calculating NPAT ( interest treated as an expense ).

Targets below assume dilution from an equity raise of A$15M or less to boost working capital:

• 1-2 year target about 11c.
• 2-3 year target about 19c.
• 3-4 year target about 28c.

On analysis below, surplus cashflows should be enough for maintaining working capital and also funding grade control drilling required for Montepuez Stage 2 and for Balama Stages 1 and 2.

As stated above, this would require them to achieve basket pricing and OPEX in line with their studies. Mined product would also need to match their identified flake distribution.






Worksheets for Montepuez and Balama