GoviEx (0.375 CAD/share, September 7, 2021). Potential price target 20.0 CAD/share in 2025 (53x potential) = 1.25 CAD today, with an additional 100% annual appreciation potential over the coming four years, based on the Finanskursen valuation methods
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Om du förstår svenska kanske den här artikeln gör dig intresserad av att få veta mer om hur man kan analysera noterade och onoterade aktier. Kolla i så fall in Finanskursen.se där jag visar hur jag gör när jag analyserar och investerar. Finanskursen 4 börjar den 3 oktober. Ansök senast den 25 september.
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GoviEx is currently a micro cap (150m USD) uranium mine developer, with a handful of promising assets in Africa (Niger, Zambia and Mali).
Early 2025, GoviEx’s Madaouela mine in Niger should be producing its first commercial batches of uranium, at a low all-in cost of 25-30$/lb, including capex costs. By then supply/demand dynamics in the vastly undersupplied uranium market should have pushed prices to (at least) 75$/lb, to get all the marginal uranium mines to profitability and thus willing to re-start production. The previous peak was 137$/lb, so a new peak, considering how unbalanced the uranium market is, of let’s say 150$/lb would not be at all that surprising, not to mention 75-100$.
The time line for GoviEx, and thus forming a list of likely share price triggers, is approximately the following:
- Feasibility study Niger Madaouela finishes around May-June 2022
- => takeoff agreement with a utility company Q3-Q4 2022
- => H2 2022: loan financing $180m, and around
- 20% equity dilution (25% new shares from 540m to 675m) for the remaining 180m financing need. I’m assuming the share issue can be made at around a $900m (USD) valuation post money = 1 125m CAD* => 1.67 CAD/share
* Madaouela will probably according to the coming Feasibility Study be able to produce 2.5m lbs a year in 25 years. Assuming 25$ margin per lb in the initial offtake contract (a uranium price of 50-55$), the annual profit in Madaouela will be approx. 60m$, which should be worth 15x that in a share issue (considering rising prices and additional assets in other mines) = 900m$ (USD)
- => mine construction starts in Q1 2023
- => production starts in H1 2025
GoviEx has 3 other sites (in Niger, Zambia and Mali) with possibly similar potential as the Madaouela mine, but significantly lower capex need (could be self-financed). Simply taking the 900m$ times four brings GoviEx’s future market cap to 3.6 billion USD or 4.5B CAD = 6.67 CAD/share.
However, the share price value of 6.67 CAD is calculated based on just 50-55$/lb uranium price, and a 25$ margin for GoviEx. That margin could easily double to 50$ or reasonably triple to 75$ at a long term equlibrium uranium price of 100$/lb. At that price level, new mines and new nuclear power plants might find a more stable supply/demand equilibrium. Priced at 15x GoviEx would then be worth 20 CAD/share, or 13 CAD at 10x.
Subtract taxes, unexpected capex, less available uranium, or add more available molybdenum/silver/gold/copper, higher uranium panic buying price spike, a favorable exit etc.; and you should still arrive at a warranted share price in 2025 of around 10-20 CAD/share, with a spike going even higher than that. My target is 20 CAD/share in mid 2025, which at a 100% annual discount rate over 4 years translates to 20/(2^4)= 1.25 CAD/share today (+230%).
Please note that this post is only meant as an entertaining and possibly educational example, and is in no way, shape or form to be construed as a recommendation to buy or sell any financial instruments, whether related to GoviEx or otherwise
Kolla som sagt gärna in Finanskursen.se där jag visar hur jag gör när jag analyserar och investerar. Videon nedan utgör en kort introduktion till innehållet i Finanskursen. Läs gärna även videobeskrivningen. Kursen börjar den 3 oktober 2021.
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Thanks for bringing this to English.
Glad to hear this can help Karl! Of course, use it with a name, would be glad to spread this course, I take it for an excellent investment that I've made. Best of luck with marketing of this, it's a really awesome system!!
Where did the 100% discount rate come from?
My brain.
It’s an arbitrary choice to show that if my analysis is correct, you could buy GoviEx up to 1.25/share and still expect 100% annual appreciation for 4 more years. NB: No discount rate is ever correct, they are just used to show what’s priced in, given a certain end result.
I’d do it the other way round – calculate the appreciation from the current price and see if I think it justifies the risk. Not that my bank will let little boys like me dabble in “penny” stocks.
Do you know what the size of the Mali’s asset in relation to the Zambia and Niger? At this point pretty risky to count on it given the political and security situation.
Hi Mikael, would you ever come out with an English version of the finance course? I would definitely buy it.
Hej! Uppskattar verkligen analysen. Dock lite funderingar, Daniel Major nämnde själv i eran podcast att kostnader att producera, all in, opex (22 dollar beräknat för gruvans livslängd, men 18 först 5-6 åren) capex (12 dollar) + royalty (10% ~5 $), så snarare låg all in cost runt cirka 35-39$. Sedan så skrev du 900 ×4, detta förstår jag inte helt, då det är 3 projekt, men framför allt 2 projekt. Har du andra antaganden som jag som rokie inte tar i beaktning som fortfarande rättfärdigar potentiella värderingen. Han nämnde också att kontraktpriset aldrig gick över 75 förra cyceln, är det verkligen rimligt att förvänta sig att de dubblas nästa Bull runt?