WheresTheMonkey
Regular
So any issues with what Bell Potter have reported ?
Broker research reports
- Thread starter teilenswert
- Start date
cosors
👀
Thank you! And I will make time for it today. I was already on my way to work only to find that I have plenty of time for the 24 pages today
WheresTheMonkey
Regular
I like this bit on Page 4.................( OK yes I did change the font size just slightly)
3. Ticking the boxes for institutional investors .
a) We believe TLG will appeal to institutional investors for the following reasons:
i. TLG’s vertically integrated mine to anode business model reduces intermediary overheads, whilst attracting premiums for the highquality product for use in Tier-1 European EV’s. Whilst margins may compress over-time with the entrance of additional anode capacity, we see TLG being better positioned to protect margins.
ii. TLG boasts a strong management team who have grown the business and are directly aligned with the performance of the shares. CEO Mark Thompson is the largest individual holder on the register with 4% of shares on issue.
iii. Proximity to customers, and low-cost hydroelectricity reduces TLG’s carbon footprint, appealing to ESG conscious investors as well as auto manufacturers requiring visibility of environmental footprint for components.
Potential catalysts
1. Construction commencement (1HFY24)
2. Binding offtake (Now to 1HFY24)
3. Funding (1HFY24)
4. Production (Stage 1) (BPe 3QFY25) 5. Production (Stage 2) (BPe CY28)
3. Ticking the boxes for institutional investors .
a) We believe TLG will appeal to institutional investors for the following reasons:
i. TLG’s vertically integrated mine to anode business model reduces intermediary overheads, whilst attracting premiums for the highquality product for use in Tier-1 European EV’s. Whilst margins may compress over-time with the entrance of additional anode capacity, we see TLG being better positioned to protect margins.
ii. TLG boasts a strong management team who have grown the business and are directly aligned with the performance of the shares. CEO Mark Thompson is the largest individual holder on the register with 4% of shares on issue.
iii. Proximity to customers, and low-cost hydroelectricity reduces TLG’s carbon footprint, appealing to ESG conscious investors as well as auto manufacturers requiring visibility of environmental footprint for components.
Potential catalysts
1. Construction commencement (1HFY24)
2. Binding offtake (Now to 1HFY24)
3. Funding (1HFY24)
4. Production (Stage 1) (BPe 3QFY25) 5. Production (Stage 2) (BPe CY28)
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WheresTheMonkey
Regular
And this bit on Page 8
Bloomberg New Energy Finance (BNEF) estimate the anode is roughly 12% of the total cost of the battery pack, providing a US$ anode cost for TLG offtake partners of roughly ~$1,893. We then derived from this the cost per kg and per tonne by dividing the total anode cost by the weight of the anode in the battery pack (on average 78kg). This resulted in an estimated cost of $24,272/t, which is substantially higher than the US$12,312/t utilised in the DFS.
Bloomberg New Energy Finance (BNEF) estimate the anode is roughly 12% of the total cost of the battery pack, providing a US$ anode cost for TLG offtake partners of roughly ~$1,893. We then derived from this the cost per kg and per tonne by dividing the total anode cost by the weight of the anode in the battery pack (on average 78kg). This resulted in an estimated cost of $24,272/t, which is substantially higher than the US$12,312/t utilised in the DFS.
Amur27
Emerged
Thanks again WTM - this document is probably one of the best independently prepared reports about TLG. It provides a would be investor (and also us Talgarians) with all the facts and figures right up to now. It shows the current platform for 'where to from here'. The report is basically the culmination of the years Mark and his team have put in, for setting us up with only good and better news to come. Right here and now, TLG is on the pointy end and years ahead of any new industry entrants.
WheresTheMonkey
Regular
Yep.............really comprehensive analysis. This would have taken quite some time to put together
cosors
👀
I have compiled here what I have noticed. Oh, you can take care of all the numbers around which I have turned a blind eye - I'm curious
________________
Here we can read for the first time that Talga's own scheduling can no longer be kept.
With the environmental permit approved on 6th April 202
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I wonder when we will see turnover here. There must be contracts of some kind. Talga doesn't give away tons of test material in the hope that the customer will like it so much that he will buy it. It's a development for the customer. I actually expect to see that in the figures at some day/point.
The process began with coin cell level testing, up to now where bulk samples are being provided to customers through the EVA plant which produces tonnes of material monthly for customer testing.
________________
I think that's important too. Soon it was said many months ago.
Running concurrently with the permitting process is the conversion to binding status for the ACC and Verkor offtake agreements, which TLG anticipate prior to the advancement of debt funding discussions. We see the conversion to binding status as a key hurdle for TLG, noting that debt support will likely not be provided on a non-binding agreement.
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TLG has an option over land adjacent to the current Luleå processing site, which should provide a smooth expansion in operations.
________________
I always enjoy reading something like that. Dear new Chinese NV friends. By the way, I just heard on the radio how great German politicians think it is that NV is independent from China. They are going to build a factory here. What an irony.
We may see other anode manufacturers setup operations in Europe, however we would expect a lagged effect to progress through the qualification phase for each manufacturer (~2+ years) and we see substitutability (once the product is in use in a line of EV’s) as low.
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We see the risk from peers currently in the graphite sector as low, whilst there is a short list of advanced peers progressing further down the battery value chain...
For every tonne of ore processed, TLG will produce ~182kg of CSPG (or ~202kg battery anode). Compared to SYR and MNS, which for every tonne of ore processed could produce ~38kg and ~18kg of CSPG respectively.
...
SYR estimates costs through to a mid-quality active anode material (AAM) of US$3,020/t, which assumes operating costs at Balama of US$425/t (Q123 US$668/t). The margin on SYR’s product could be in the range of US$1,980-US$3,980/t (~40-57%) assuming full capacity operating metrics at Balama. In comparison, TLG’s high-quality Talnode-C product is likely to achieve prices around ~US$12,295/t with operating costs (from mine to anode) of US$2,647/t (BPe) equating to ~US$9,353/t margin (78%).
__________________
intermission
I take a break here and enjoy the unexpectedly free day.
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Pharvest
Regular
Cheers WTM
cosors
👀
At least we already have with the EVA one of the planned three lines running permanently under full steam. I also think I heard or read somewhere that the capacity of the EVA has been optimised and increased.
For me it would be a dream if the foundations were in place by next winter. Once that is in place the steel beams for the roof can be installed against the snow and construction can continue over the long winter months as we could observe at NV.
Semmel
Top 20
They probably have made a mistake here. I have not read the report yet (family is more important), but without more context let's engage our brain for a moment while hiding on the white throne.
They imply that a battery pack costs about $15770, of which 12% fall on the anode wich makes $1893. And that is, presumably, for an 80kwh pack.
Batteries (not packs) cost around $100/kWh (some more, few less) or the above battery pack has battery costs of about $8000. The reason the pack costs more is the electronics, packaging, cooling, margins, etc. Since the pack part does not impact the cost of the anode, only the cost of batteries within the pack is relevant.
If you take $8000 as base line instead of $15770, and do the same calculation, you end up right around the DFS price.
Semmel
Top 20
Ohh wow that's a lot dilution!! I hope it's way less!! And hopefully not dilution of talga core shares but something like part of the project, such that we might be capped on the proceeds from the first mine for s couple of years, but not for everything forever.. we will see.
$1.35 makes no sense, even by their logic. They state they don’t expect finance until after offtake agreements, which won’t take place until after permits have been approved (appeals have ended).
If permits are approved and we have off take agreements, how the hell is the share price still going to be around the $1.40 mark? That indicates that permits and offtakes have no affect on the share price and therefore does not form part of the risk profile for Talga, which they totally state it does!
Semmel
Top 20
I have to retract my statement (leaving it up for posterity). They seem to have done the math correctly. You guys should have shoot me down for being wrong
..I would love this 24k$/t to be correct, for obvious reasons. But it doesn't pass the smell test. Something is probably wrong here. I suspect that the source material is either wrong or misinterpreted.
WheresTheMonkey
Regular
Don't forget the Target Price is $2.50 so we must be misinterpreting the report ( or they have indeed made an error) because Yes it makes no sense at all.
I think they are doing a CR at current levels of SP to stay on the ultra conservative side. Using their Target Price then $1.35 is a ridiculous discount to the $2.50 Target.
I think we will be around $2.80 sometime this year once the Courts are sorted and an offtake or two are announced. Then a Cap Raise around $2.30 would obviously reduce dilution plus there would be some Euro Bank debt taken on board further reducing dilution.
If they had released this Report the day after the permits were granted they'd be using $2.00 for the CR
Plus Page 25 they tell us what their recommendation actually means
Recommendation structure
Buy: Expect >15% total return on a 12 month view. For stocks regarded as ‘Speculative’ a return of >30% is expected.
So clearly $1.35 is too low as >30% would be a minimum
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Maybe the Bloomberg 12% estimate isn't just anode material costs, but also manufacturing costs of making the slurry, creating the rolls, drying, etc. and therefore is being misinterpreted by Bell Potter.I have to retract my statement (leaving it up for posterity). They seem to have done the math correctly. You guys should have shoot me down for being wrong
I would love this 24k$/t to be correct, for obvious reasons. But it doesn't pass the smell test. Something is probably wrong here. I suspect that the source material is either wrong or misinterpreted.
catdog
Member
That's what I was thinking as well.
WheresTheMonkey
Regular
Yeah I think so. They do state they are assuming 60/40 Debt to Equity on Page 1
Report was released by Bell's on 16 May. SP on 15th was $1.38 and on 16th $1.30. So they have used $1.35 even though it contradicts other parts of the report.
I notice they hardly discuss the possibility of the appeal (Page 6) and don't realise the effect it will have on SP once dismissed. They perhaps believe permits are already a certainty and it's de-risked and will have no further effect on the SP just for their modeling. We know it's not de-risked yet but ask me again in a month
Note the Key Milestones on Page 1.............. no mention of Permit or Refinery
Key milestones over the next 12 months which will support our thesis for TLG include
1) Binding offtake for ~75% of production to align with debt funding,
2) project funding of ~A$860m, (BPe 60/40 debt/equity),
3) construction commencement (BPe 1HFY24), and 4) production (BPe 3QFY25).
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