Talga's Current NPV (Updated April 2022)

[Gero]

Talga's Current NPV (Updated April 2022)

If you add the NPV's in the Vittangi DSF and the Niska SS they have a combined NPV with an 8% discount rate of between US$3.5B and US$5.7B.

DFS_TimingUpdate_v2 (talgagroup.eu-central-1.linodeobjects.com)

MicrosoftWord - Final_01_ASX.docx (talgagroup.eu-central-1.linodeobjects.com)

The range is due to the Talnode-C sale price range of $7,500 to $11,250/t used in the Niska SS.

In the Vittangi DFS, a 24 years LOM isUS$12,312/t anode and is forecast as a flat price of US$11,875/t anode from2030. As this is a more detail document and has been completed since the Niska SS I think we can use the upper range of Talnode-C sales price of US$11,250/tin calculating the Niska NPV.

		NPV 8% Discount	Calculation
		Vittangi DFS	$1,054,000,000
		Niska SS	$4,650,000,000
		Total	$5,704,000,000
		Share On Issue	304,700,000
		US$/SP	$18.72
		A$/SP	$24.96	Ex Rate	0.75

So even at an annual 100kt Talnode-C production rate we get a current NPV SP of $25.00.

With a current SP of $1.675 the market is valuing Talga at less than 10% of the combined NVP's.

Even allowing for a 33% dilution via an Equity Stake and/or Capital Raising this would still give us an NPV SP of over $15.

So what will move the SP closer to the $15?

1. Mitsui JV and Project Funding which we should know by the 31/08/22.

MicrosoftWord - 20211213MOU_ASX.docx (talgagroup.eu-central-1.linodeobjects.com)

2. Permits. Talga’s Swedish Chairman state at the opening of the EVA Plant:

"Our assessment is that we are so far advanced in this process that we should be able to get approval fairly soon, hopefully in the summer or early autumn.”

So, this would mean sometime between June and September this year, which aligns with Company’s previous time frame of mid-2022.

https://hotcrapper.com.au/posts/60597834/single

3. Off Take Agreements. Now that the EVA Plant is operational, the final stage of qualification and testing by the Automotive OEM’s and Battery Manufacture can commence.

In the EVA Commissioned and Operating announcement it said:

“Large scale commercial testing is a critical stage in the EV customer procurement process for active anode material.”

“More than 20 battery manufacturers and automotive customers engaged to receive Talnode®-C samples for large-scale EV battery qualification and procurement processes”

This being the case I would expect we may have some binding purchase agreements in the next 3-6 month, conditional on Permits being granted.

The longer Talga can hold out the mored esperate the Auto OEM's and Battery Manufactures are going to become and more willing to pay the price that Talga wants.

So, it is now a game of Musical Chairs with the Auto OEM's and Battery Manufactures dancing around Talga waiting for one of them to make the first move. That is when the music stops and everyone else will scramble to get a seat on the very limited chairs. They all know that there is going to be a shortage of anode material and none of them can afford to be left standing without a seat at the Talnode-C & Si banquet table.

MicrosoftWord - 20220331EVA_CommissioningCompleted_FINAL.docx(talgagroup.eu-central-1.linodeobjects.com)

4. Resource Upgrade. In the “Drill results to upgrade Europe's largest graphite resource” announcement the company stated:

A revision of Talga's Vittangi graphite resources (Table 4) is now underway to support and optimize future expansion plans. This Mineral Resource upgrade is planned for completion in late Q2 2022 and aims to expand what is currently Europe's largest JORC or NI43-101 defined graphite mineral resource (see Table 7). “

Information received from completed geotechnical and water bore drilling will be compiled and used to optimize aspects of the Nunasvaara South DFS mining plan over the first few years of operation.

Building on the latest drill results and SkyTEM survey (ASX:TLG 26 October 2021) a new 26 hole drill program will commence at Vittangi in coming weeks. The new program will test the JORC exploration target linking the Niska South and Niska North resources (see Figure 5), with a view to revise resources further in the second half of 2022.

I expect after the next drilling program is completed the resource upgrade due in the second half of 2022 will be a combined total of around50Mt at @>25% Cg. This would equate to ~ 12.5Mt of Cg which would be produce 500Kt of anode for the next 25 year. Which is still only half the amount Europe will require by 2030.

MicrosoftWord - 20220303FinalDrillResults_ASX.docx(talgagroup.eu-central-1.linodeobjects.com)

It is likely that we may have all four of the above before the end of the September or by the end of this year at the latest. If that was the case, I could see the SP well north of $10. Which would give Talga an MC of ~A$3B. If VUL can be valued at ~A$1.4B and NVX at ~A$3.1B at their stages of development then I think A$3B for Talga with all four boxes ticked is not unreasonable, as it would still be less than 50% of the combined non diluted NVP's.

Also remember that all the calculations are only on 100kt of Talnode per annum. I'm sure that once resource upgrade drilling is completed, we will see production increase 5-10 times this amount over the next 10 yrs. Giving Talga a further 5-10 times increase in MC.

There is no such thing as a sure thing, as we found out at the end of November last year, but I'm confident that there is minimal downside risk at the current SP.

As always do you own research.

Gero

 

[FREYR]

I can't really see your calculations, how you have arrived at this figure. I think I may have missed something.

 

[P960727910]

You haven’t count if there is a future capital rise. There will be more shares on the market

 

[Affenhorst]

Thanks for the summary. Don't forget that Talga also wants to release a new feasibility study spanning all of the Vittangi deposit. I hope we'll see it this year but it will probably incorporate the results of the next drilling campaign, so who knows.

 

[Gero]

I can't really see your calculations, how you have arrived at this figure. I think I may have missed something.

Hi Freyr

These are not my calculations, they are Talga's calculations that were released in the Vittangi DSF and the Niska SS.

I have attatched the links in my post above.

Gero

 

[Gero]

You haven’t count if there is a future capital rise. There will be more shares on the market

Hi P96

The $25 SP calculation is based on Talga's calculations that were released in the Vittangi DSF and the Niska SS.

If your read further down my post you will see a adjusted the NPV SP to $15 to allow for a future 33% dilution via an Equity Stake and/or Capital Raising.

Again the NPV is only calculated on 100Kt of Anode per year, as in point 4 of my post, I think this will raise to at least 500Kt before the end of this decade, which would increase the valuation 5x.

Gero

 

[Gero]

Talga'sCurrent NPV (Updated October 2022)

If you add the NPV's in the Vittangi DSF and the Niska SS they have a combined NPV with an 8% discount rate of between US$3.5Band US$5.7B.

DFS_TimingUpdate_v2 (talgagroup.eu-central-1.linodeobjects.com)


MicrosoftWord - Final_01_ASX.docx (talgagroup.eu-central-1.linodeobjects.com)


The range is due to the Talnode-C sale price range of $7,500 to $11,250/t usedin the Niska SS.

In the Vittangi DFS, a 24 years LOM isUS$12,312/t anode and is forecast as a flat price of US$11,875/t anode from2030. As this is a more detail document and has been completed since the NiskaSS I think we can use the upper range of Talnode-C sales price of US$11,250/tin calculating the Niska NPV.

NPV 8% Discount	Calculation	Net Equity
Vittangi DFS	$1,054,000,000​	60%​	$632,400,000​
Niska SS	$4,650,000,000​	67%​	$3,115,500,000​
Total	$5,704,000,000​	~65%​	$3,747,900,000​
Share On Issue	350000000​
US$/SP	$10.71​
A$/SP	$16.47​	Ex Rate​	0.65​

Even after allowing for a ~35% dilution via Project Equity Financing, at an annual 100kt Talnode-C production rate we still get a current NPV SP of ~$16.50.

So what will move the SP closer to the $16.50?

1. Permits. The Environmental Court hearing is due in February next year with a decision due by the end of March.


2. Off Take Agreements. We have one Non-Binding Off Take Agreement with ACC, with a decision to go to Binding due by 30th November 2022.

Now that the EVA Plant is operational, the final stage of qualification and testing by the Automotive OEM’s and Battery Manufacture has commence.


In the EVA Commissioned and Operating announcement it said:

“Large scale commercial testing is a critical stage in the EV customer procurement process for active anode material.”

“More than 20 battery manufacturers and automotive customers engaged to receive Talnode®-C samples for large-scale EV battery qualification and procurement processes”


This being the case I would expect we may have some more binding purchase agreements in the next 3-6 month, conditional on Permits being granted.

The longer Talga can hold out the more desperate the Auto OEM's and Battery Manufactures are going to become and more willing to pay the price that Talga wants.


So, it is now a game of Musical Chairs with the Auto OEM's and Battery Manufactures dancing around Talga, ACC now has the option of taking the first chair. Once they do that’s when the music stops and everyone else will scramble to get a seat on the very limited chairs. They all know that there is going to be a shortage of anode material and none of them can afford to be left standing without a seat at the Talnode-C & Si banquet table.

MicrosoftWord - 20220331EVA_CommissioningCompleted_FINAL.docx(talgagroup.eu-central-1.linodeobjects.com)


3. Funding. From the recent update:

Talga's project financing strategy targets a mix of project equity and debt, with a focus on European institutional and government-backed funding instruments. To assist execution of this strategy, Talga appointed BurnVoir Corporate Finance as specialist financial advisor.

Further to completing value engineering and having received a number of Letters of Interest from leading financiers, Talga has commenced a detailed engagement and due diligence process with financiers, focused on debt structuring and terms. Whilst responses remain non-binding and contingent upon satisfactory due diligence and approvals, financiers have continued to demonstrate strong strategic alignment and credit appetite to provide project financing at target project gearing.

Microsoft Word - 20220921LenderSiteVisit_ASX.docx (talgagroup.eu-central-1.linodeobjects.com)



4. Resource Upgrade. With the final drilling results in an updated graphite resource is expected to be complete before the ended of December Quarter.


I the resource upgrade will be around 40Mt at @>25% Cg. This would equate to ~ 10t of Cg which would be enough to produce 500Kt of anode for the next 20 year. Which is still only half the amount Europe will require by 2030.

20220920LastNiskaDrillResults_ASX.docx (talgagroup.eu-central-1.linodeobjects.com)


It is likely that we may have two to three of the above before the end this year with the Permit by the March Quarter or by the end of this Financial Year at the latest. If that was the case, I could see the SP well north of $5. Which would give Talga an MC of ~A$1.75B, which would still be less than a third of the combined diluted NVP's.

Also remember that all the calculations are only on 100kt of Talnode per annum. I'm sure that once resource upgrade drilling is completed, we will see production increase 5-10 times this amount over the next 10 yrs. Giving Talga a further 5-10 times increase in MC.

There is no such thing as a sure thing, as we found out at the end of November last year, but I'm confident that there is minimal downside risk at the current SP.

As always do you own research.

Gero

 

[cosors]

Talga'sCurrent NPV (Updated October 2022)

If you add the NPV's in the Vittangi DSF and the Niska SS they have a combined NPV with an 8% discount rate of between US$3.5Band US$5.7B.

DFS_TimingUpdate_v2 (talgagroup.eu-central-1.linodeobjects.com)


MicrosoftWord - Final_01_ASX.docx (talgagroup.eu-central-1.linodeobjects.com)


The range is due to the Talnode-C sale price range of $7,500 to $11,250/t usedin the Niska SS.

In the Vittangi DFS, a 24 years LOM isUS$12,312/t anode and is forecast as a flat price of US$11,875/t anode from2030. As this is a more detail document and has been completed since the NiskaSS I think we can use the upper range of Talnode-C sales price of US$11,250/tin calculating the Niska NPV.

NPV 8% Discount	Calculation	Net Equity
Vittangi DFS	$1,054,000,000​	60%​	$632,400,000​
Niska SS	$4,650,000,000​	67%​	$3,115,500,000​
Total	$5,704,000,000​	~65%​	$3,747,900,000​
Share On Issue	350000000​
US$/SP	$10.71​
A$/SP	$16.47​	Ex Rate​	0.65​

Even after allowing for a ~35% dilution via Project Equity Financing, at an annual 100kt Talnode-C production rate we still get a current NPV SP of ~$16.50.

So what will move the SP closer to the $16.50?

1. Permits. The Environmental Court hearing is due in February next year with a decision due by the end of March.


2. Off Take Agreements. We have one Non-Binding Off Take Agreement with ACC, with a decision to go to Binding due by 30th November 2022.

Now that the EVA Plant is operational, the final stage of qualification and testing by the Automotive OEM’s and Battery Manufacture has commence.


In the EVA Commissioned and Operating announcement it said:

“Large scale commercial testing is a critical stage in the EV customer procurement process for active anode material.”

“More than 20 battery manufacturers and automotive customers engaged to receive Talnode®-C samples for large-scale EV battery qualification and procurement processes”


This being the case I would expect we may have some more binding purchase agreements in the next 3-6 month, conditional on Permits being granted.

The longer Talga can hold out the more desperate the Auto OEM's and Battery Manufactures are going to become and more willing to pay the price that Talga wants.


So, it is now a game of Musical Chairs with the Auto OEM's and Battery Manufactures dancing around Talga, ACC now has the option of taking the first chair. Once they do that’s when the music stops and everyone else will scramble to get a seat on the very limited chairs. They all know that there is going to be a shortage of anode material and none of them can afford to be left standing without a seat at the Talnode-C & Si banquet table.

MicrosoftWord - 20220331EVA_CommissioningCompleted_FINAL.docx(talgagroup.eu-central-1.linodeobjects.com)


3. Funding. From the recent update:

Talga's project financing strategy targets a mix of project equity and debt, with a focus on European institutional and government-backed funding instruments. To assist execution of this strategy, Talga appointed BurnVoir Corporate Finance as specialist financial advisor.

Further to completing value engineering and having received a number of Letters of Interest from leading financiers, Talga has commenced a detailed engagement and due diligence process with financiers, focused on debt structuring and terms. Whilst responses remain non-binding and contingent upon satisfactory due diligence and approvals, financiers have continued to demonstrate strong strategic alignment and credit appetite to provide project financing at target project gearing.

Microsoft Word - 20220921LenderSiteVisit_ASX.docx (talgagroup.eu-central-1.linodeobjects.com)



4. Resource Upgrade. With the final drilling results in an updated graphite resource is expected to be complete before the ended of December Quarter.


I the resource upgrade will be around 40Mt at @>25% Cg. This would equate to ~ 10t of Cg which would be enough to produce 500Kt of anode for the next 20 year. Which is still only half the amount Europe will require by 2030.

20220920LastNiskaDrillResults_ASX.docx (talgagroup.eu-central-1.linodeobjects.com)


It is likely that we may have two to three of the above before the end this year with the Permit by the March Quarter or by the end of this Financial Year at the latest. If that was the case, I could see the SP well north of $5. Which would give Talga an MC of ~A$1.75B, which would still be less than a third of the combined diluted NVP's.

Also remember that all the calculations are only on 100kt of Talnode per annum. I'm sure that once resource upgrade drilling is completed, we will see production increase 5-10 times this amount over the next 10 yrs. Giving Talga a further 5-10 times increase in MC.

There is no such thing as a sure thing, as we found out at the end of November last year, but I'm confident that there is minimal downside risk at the current SP.

As always do you own research.

Gero

Thank you very much for your work! I appreciate it very much.

 

[teilenswert]

Every time the thought creeps in to sell some of my Talga stock at a loss, I read through this thread and Gero's other post on "Talga Annual Anode Production Projections" (which you might also update and share here sometime) and decide to hang on for a few more months. The first time you shared this calculation on the other forum was November 2021 and the share price was still at A$2.05. Of course, on a macro level, some things have changed dramatically since then. Hopefully your projections still come to pass more or less as is (I'd be happy with a ramp-up of 100 k tons by 2028).

Has anyone ever tried to get insights from other companies on what their production costs and sale prices are for their anode material? Does anyone know the current price benchmarks of anode material from Benchmark Minerals, and how they have changed since Talga's DFS? Or does Benchmark Minerals only report graphite prices?

 

[JNRB]

Every time the thought creeps in to sell some of my Talga stock at a loss, I read through this thread and Gero's other post on "Talga Annual Anode Production Projections" (which you might also update and share here sometime) and decide to hang on for a few more months. The first time you shared this calculation on the other forum was November 2021 and the share price was still at A$2.05. Of course, on a macro level, some things have changed dramatically since then. Hopefully your projections still come to pass more or less as is (I'd be happy with a ramp-up of 100 k tons by 2028).

Has anyone ever tried to get insights from other companies on what their production costs and sale prices are for their anode material? Does anyone know the current price benchmarks of anode material from Benchmark Minerals, and how they have changed since Talga's DFS? Or does Benchmark Minerals only report graphite prices?

Don't forget the extra sneaky bonuses we've got coming...

1. Silicone
2. SCALE
   

 

[brewm0re]

Every time the thought creeps in to sell some of my Talga stock at a loss, I read through this thread and Gero's other post on "Talga Annual Anode Production Projections" (which you might also update and share here sometime) and decide to hang on for a few more months. The first time you shared this calculation on the other forum was November 2021 and the share price was still at A$2.05. Of course, on a macro level, some things have changed dramatically since then. Hopefully your projections still come to pass more or less as is (I'd be happy with a ramp-up of 100 k tons by 2028).

Has anyone ever tried to get insights from other companies on what their production costs and sale prices are for their anode material? Does anyone know the current price benchmarks of anode material from Benchmark Minerals, and how they have changed since Talga's DFS? Or does Benchmark Minerals only report graphite prices?

Agree that comparing other companies’ costs (& revenue) is extremely difficult, especially as not all (or many) companies are going from mine to anode.



MT has reiterated that’s where we are capturing the margins. Recent examples of other graphite players you’ll see quarterly’s (& studies) released to compare actual & anticipated.



Looking purely at Benchmark Minerals graphite pricing is incomplete but does provide a guide, given the natural/synthetic material needed within the anode.



As far as revenue, I’ve pondered that too. I’d recently stumbled on the article attached. I’m not saying TLG will fetch the ‘super premium anode material prices’ of US $18,000-$22,000/tonne, but those figures would be extremely encouraging when compared to ‘premium anode material prices’ of US $8,000-$10,000. That would be a nice upside to the DFS figures if getting toward the super premium material prices. This is also why TalSi fascinates.



As far as selling some TLG, I’m unsure if ‘months’ is the right timeframe? Holding on a few more ‘years’ might be more appropriate, as the party hasn’t even started

 

[brewm0re]

Agree that comparing other companies’ costs (& revenue) is extremely difficult, especially as not all (or many) companies are going from mine to anode.



MT has reiterated that’s where we are capturing the margins. Recent examples of other graphite players you’ll see quarterly’s (& studies) released to compare actual & anticipated.



Looking purely at Benchmark Minerals graphite pricing is incomplete but does provide a guide, given the natural/synthetic material needed within the anode.



As far as revenue, I’ve pondered that too. I’d recently stumbled on the article attached. I’m not saying TLG will fetch the ‘super premium anode material prices’ of US $18,000-$22,000/tonne, but those figures would be extremely encouraging when compared to ‘premium anode material prices’ of US $8,000-$10,000. That would be a nice upside to the DFS figures if getting toward the super premium material prices. This is also why TalSi fascinates.



As far as selling some TLG, I’m unsure if ‘months’ is the right timeframe? Holding on a few more ‘years’ might be more appropriate, as the party hasn’t even started

https://www.marketindex.com.au/news/graphite-from-evolution-energy-minerals-produces-super-premium-class-of

 

[Due_Delinquence]

https://www.marketindex.com.au/news/graphite-from-evolution-energy-minerals-produces-super-premium-class-of

Very thankful for you sharing this, I tend to lurk HC and everytime I come here I'm always grateful. Thank you

 

[brewm0re]

Very thankful for you sharing this, I tend to lurk HC and everytime I come here I'm always grateful. Thank you

Hi DD. My pleasure, and there are many contributors on here, that make this journey of investing less ‘isolating’. The TLG following has its loyal base and TSE posters are a good bunch here. I do look @ HC from time to time, but unfortunately a lot of noise and drama does spoil it somewhat when trying to find any gems that people share. Cheers DD

 

[brewm0re]

Every time the thought creeps in to sell some of my Talga stock at a loss, I read through this thread and Gero's other post on "Talga Annual Anode Production Projections" (which you might also update and share here sometime) and decide to hang on for a few more months. The first time you shared this calculation on the other forum was November 2021 and the share price was still at A$2.05. Of course, on a macro level, some things have changed dramatically since then. Hopefully your projections still come to pass more or less as is (I'd be happy with a ramp-up of 100 k tons by 2028).

Has anyone ever tried to get insights from other companies on what their production costs and sale prices are for their anode material? Does anyone know the current price benchmarks of anode material from Benchmark Minerals, and how they have changed since Talga's DFS? Or does Benchmark Minerals only report graphite prices?

Hi teilenswert, saw this in X (Twitter) that just got posted by BMI. Contemplated subscribing to them in the past, but rather put more money toward directly investing in TLG and finding these broad headlines as they surface. Sort of answers your query and my thoughts on pricing. For synthetic graphite (sg) in Feb 2022 it was a pip under $12k/t and now slightlly above $8k/t (but as the headline states: price stabilizing)….
I know TLG are in the NG space, rather than SG, but it has been stated by MT (paraphrasing) that TalC has energy density and LCA similarities of a synthetic battery, rather than the traditional NG anode. That pricing is trending down but should well pop up as we reach inflection point of batteries surpassing demand/use of other industries needing graphite. Again, TalSi should fetch higher prices, but also need to consider costs to produce the anode (eagerly await the DFS on TalSi).

 

[brewm0re]

Hi teilenswert, saw this in X (Twitter) that just got posted by BMI. Contemplated subscribing to them in the past, but rather put more money toward directly investing in TLG and finding these broad headlines as they surface. Sort of answers your query and my thoughts on pricing. For synthetic graphite (sg) in Feb 2022 it was a pip under $12k/t and now slightlly above $8k/t (but as the headline states: price stabilizing)….
I know TLG are in the NG space, rather than SG, but it has been stated by MT (paraphrasing) that TalC has energy density and LCA similarities of a synthetic battery, rather than the traditional NG anode. That pricing is trending down but should well pop up as we reach inflection point of batteries surpassing demand/use of other industries needing graphite. Again, TalSi should fetch higher prices, but also need to consider costs to produce the anode (eagerly await the DFS on TalSi).

If anybody does subscribe to BMI, it be great to know those 6 price grades of 3 naturalgraphite anode prices and 3 syntheticgraphite anode prices.

 

[teilenswert]

Okay, thanks for the additional insights. The last time Mark commented on the pricing of AAM was in the November 2022 webinar, starting at the 6.00 minute mark:



So according to your data, prices for synthetic AAM have dropped quite dramatically, I would assume that this also puts strong pressure on natural AAM (even if European prices behave somewhat differently due to carbon taxes etc.), and I would also assume that due to inflation, production costs and initial investments are higher than initially calculated. Let's see if Mark will give an assessment on this tomorrow. At least it feels like our targeted pricing in the DFS is a lot higher than what seems to be the status quo (see page 22 and especially page 24 in the DFS: https://talgagroup.eu-central-1.lin...ustDFSPavesWayForTalgaBatteryAnodeProject.pdf).

I'm looking forward to the webinar tomorrow and I'm sure I'll have to laugh again when Alex hands over to Mark with the phrase like: "Can you answer this question, Mark?!"

 

[Semmel]

Dont confuse synthetic graphite prices with AAM prices.. the material cost in AAM is only half the story at best.

 

[Token35]

Are there any chaps here who are good with their modelling and have thoughts on where things may go with dividends?

Time frame to when it might happen, what sort of % you think it might be?

Just interested to hear the thoughts (and potential dreams that could become reality!)

 

[Rayster]

Are there any chaps here who are good with their modelling and have thoughts on where things may go with dividends?

Time frame to when it might happen, what sort of % you think it might be?

Just interested to hear the thoughts (and potential dreams that could become reality!)

I am also keen to try and understand when and what dividends may look like but i think we need to understand the conditions and amount of financing first as that will directly impact how profits are allocated.