Talga Valuation Model

[Semmel]

I decided to flesh out the Talga valuation model a bit more. By now, almost nothing is left from the original Affenhorst mode. I decided to break out the individual projects. So far, its Nunasavaara open pit mine and the Niska expansion as separate projects. I have not yet started on Talnode-Si or Talphene cathode additives or the recycling business. We basically know nothing about it. And it looks like the market is not pricing these in at all at moment. Ill post individual posts for each case.

 

[Semmel]

This is only Nunasvaara:

This is Nunsavaara plus Niska.. it becomes totally nutty at that point because the profit from Niska are so much larger that the discounted value to today is dominated by that expansion. I used 400kt/year prodiction by the way.

Not totally happy about the structure yet, so will post the full model when its done. For the moment, I am out of time. Here are both nunasvaara and Niska models:

 

[Diogenese]

Hi Semmel,

Even though you demolished my Tardus theory about Talnode-Si, I still see it as being our major product line.

The market will demand the better-performing batteries.

It will have a significantly higher cost of production because of the additional pocessing needed to produce it.


The patent describes the production process, but a picture is worth a thousand words:

WO2020261194A1 SILICON AND GRAPHITE CONTAINING COMPOSITE MATERIAL AND METHOD FOR PRODUCING SAME 20190618

This article is from a couple of years ago, before our legal hiatus.

Talga silicon anode demand drives progress - The Graphene Council

https://www.thegraphenecouncil.org/blogpost/1501180/482480/Talga-silicon-anode-demand-drives-progress

Posted By Terrance Barkan, Monday, December 19, 2022

Recent qualification and pilot trials completed with a global EV manufacturer confirmed Talnode®-Si performance under commercial cell manufacturing conditions. Li-ion battery cells containing 9% Talnode®-Si, manufactured in battery tolling and in-house development facilities, boosted battery energy capacity by ~40%. Test results of first cycle efficiency and 500 cycle life to date exceed customer targets at this stage of development.

Test results of first cycle efficiency and 500 cycle life to date exceed customer targets at this stage of development. Following positive customer tests and feedback, in accordance with its commercial strategy Talga is expanding its existing pilot line in Rudolstadt, Germany, to produce greater quantities of Talnode®-Si for commercial qualification. Commissioning of the expanded pilot line is to be completed in Q1 2023. In parallel, the Company is conducting feasibility work towards accelerating commercial Talnode®-Si production options. Negotiations with leading global EV manufacturers regarding supply volumes has commenced and production site location selection in Europe is well underway.
...
Silicon anodes help increase the performance of a variety of battery chemistries, from lithium iron phosphate (LFP) to NMC / NCA type. In an EV, depending on the vehicle, a 10% addition of silicon to the battery anode can translate into an additional ~15% range over traditional Li-ion batteries. Alternatively, silicon-boosted batteries can be made smaller or lighter, providing benefits for not only EV’s but demanding applications such as electric aviation, race cars, marine craft and drones.

Talga notes significant and rising market interest in scaling production for silicon anode outside China by global OEMs and battery makers. Benchmark Mineral Intelligence forecast the 2030 anode market share for silicon anode to be 5% or around 150,000tpa.


It is interesting that the tests on unadulterated Talnode-Si (without added graphite) produced 5 times the capacity of graphite alone. I guess that shareholders will be able to afford the 100% T-Si option (especially if they also hold BRN shares).

 

[Semmel]

Hi Dio,

Sure, I will get to Talnode-Si.. its on the list, see some hidden layers of the valuation model:

When I said we know almost nothing about it is because we dont know:
CapEx, Financing method, volume, timeline, cost to manufacture, price, etc.. I think we had rumors of price being around 15.000 USD per t and volume being much smaller than Talnode-C. But that is not enough to go by. Of course I can pull all these out of my ass, but then the model is just pure speculation and I can make it any value to Talga that I want. When we get data, I for sure add it as a project. Same as all the other items. But for now, we dont know enough.

 

[Semmel]

Calling @WheresTheMonkey .. Am I right that you have experience with this stuff? Anyone else with experience, I am happy to listen!

I struggle to model the dept. At moment, I model it like this:
1. Dept is issued at the beginning of the project and runs a fix amount of time
2. Talga is required to pay back the dept plus interest from year 1 of issue. Meaning.. if the dept is issued beginning 2025, Talga would be paying 1/n + interest end of 2025, where n is the number of years the dept runs

So.. how is this actually done in reality though? Does Talga take all the dept at once, or maybe half of it year 1 and other half year 2? Does it run for 2 years without repayment and then? Or is Talga only required to pay the interest each year and repays the loan in full at the end? I HAVE NO IDEA how this is done in cooperate environments. Can someone enlighten me?

Dept service is so important to me because it is the key driver of whether talga has cash in the bank to run the business during project build out or whether they actually run a negative number in the bank..

 

[curiousmagpie]

Calling @WheresTheMonkey .. Am I right that you have experience with this stuff? Anyone else with experience, I am happy to listen!

I struggle to model the dept. At moment, I model it like this:
1. Dept is issued at the beginning of the project and runs a fix amount of time
2. Talga is required to pay back the dept plus interest from year 1 of issue. Meaning.. if the dept is issued beginning 2025, Talga would be paying 1/n + interest end of 2025, where n is the number of years the dept runs

So.. how is this actually done in reality though? Does Talga take all the dept at once, or maybe half of it year 1 and other half year 2? Does it run for 2 years without repayment and then? Or is Talga only required to pay the interest each year and repays the loan in full at the end? I HAVE NO IDEA how this is done in cooperate environments. Can someone enlighten me?

Dept service is so important to me because it is the key driver of whether talga has cash in the bank to run the business during project build out or whether they actually run a negative number in the bank..

While the full debt facility will be approved and in place at the beginning of the project, it will only be drawn on as the construction progresses.

The contract (eg FIDIC) will likely have an initial deposit and staged payments based on completion milestones, so Talga will only be paying interest on the amount drawn at the time, with interest on the full total of the debt facility by the end.



You can try and unpick it from the bell potter analyst's report because they show assumptions on interest, compare with their assumptions on timelines

https://www.belldirect.com.au/smarter/wp-content/uploads/2024/11/TLG.pdf

 

[WheresTheMonkey]

Calling @WheresTheMonkey .. Am I right that you have experience with this stuff? Anyone else with experience, I am happy to listen!

I struggle to model the dept. At moment, I model it like this:
1. Dept is issued at the beginning of the project and runs a fix amount of time
2. Talga is required to pay back the dept plus interest from year 1 of issue. Meaning.. if the dept is issued beginning 2025, Talga would be paying 1/n + interest end of 2025, where n is the number of years the dept runs

So.. how is this actually done in reality though? Does Talga take all the dept at once, or maybe half of it year 1 and other half year 2? Does it run for 2 years without repayment and then? Or is Talga only required to pay the interest each year and repays the loan in full at the end? I HAVE NO IDEA how this is done in cooperate environments. Can someone enlighten me?

Dept service is so important to me because it is the key driver of whether talga has cash in the bank to run the business during project build out or whether they actually run a negative number in the bank..

Hi @Semmel,

Generally it would be interest only for a fixed term say 3 years at either a fixed or floating rate. The principal could just be continually rolled over subject to review at any time specified. Deals are structured to suit the circumstances. Based on experience most likely you would not include debt repayments in any cash flow forecast as it's more likely just to get rolled over year after year.

At the end of any loan agreement term TLG might go shop around for a new financier who replaces/pays back the existing debt with a new debt facility

TLG most likely would be drawing down on the facility according to what is capex being spent perhaps on a month by month basis based on an agreed formula determined by quantity surveyors and engineers. Whether that includes working capital or not depends on the loan document but I'd think the shareholders would need to keep the light on and salaries paid but I don't know....... it might included in the debt facility from the get go.

 

[Semmel]

Thx both of you! I had the strong suspicion my model was wrong and I was right! (Ha! ) I will model it such that the plan gets not repaid until the project can pay down the dept from revenue and only model it such that talga pays the interest. This will help that the cash balance does not get negative.

 

[WheresTheMonkey]

Thx both of you! I had the strong suspicion my model was wrong and I was right! (Ha! ) I will model it such that the plan gets not repaid until the project can pay down the dept from revenue and only model it such that talga pays the interest. This will help that the cash balance does not get negative.

There are a few other finance people around these pages so someone else might want to confirm this.

It is OK to use the Sweden company tax rate but TLG is Australian based and listed on the ASX so it would also need to pay Australian company tax at the rate of 30% which is then allowed a discount by double tax agreements of 20.6% to an effective Australian of 9.4%. So the full tax rate will be 30% 20.6% goes to the Swedish government and 9.4% goes to the Australian government.

 

[Gero]

There are a few other finance people around these pages so someone else might want to confirm this.

It is OK to use the Sweden company tax rate but TLG is Australian based and listed on the ASX so it would also need to pay Australian company tax at the rate of 30% which is then allowed a discount by double tax agreements of 20.6% to an effective Australian of 9.4%. So the full tax rate will be 30% 20.6% goes to the Swedish government and 9.4% goes to the Australian government.

Yes WTM that's correct.

 

[Semmel]

Not so sure, Talga AB is a swedish company and unless Talga AB gives money to Talga Group? I have no experience with this and trust your judgement. I will change the tax rate to 30 next version.

 

[Gero]

Hi Semmel

You are partly correct as long as the profit stays in the Swedish company it only pays the Swedish tax rate.

Once profits are transferred/paid to Talga Group, the difference between the Australian and Swedish Tax Rate ~9.4% will be charged by the Australian Tax Office.

So for any Australian taxpayers the dividends will be fully franked.

Gero

 

[ACinEur]

Agreed Gero

 

[cosors]

Perhaps this will help with the calculation and prediction?

It says here that the anode accounts for 9% of the costs.

Analyzing the Cost of an Electric Vehicle Battery Cell | Automotive Cells Company

ACC’s mission is to accelerate sustainable mobility for all. For all… Not for a few happy privileged people. For everyone!

www.acc-emotion.com

And here is a very detailed analysis of the costs.

Battery cost forecasting: a review of methods and results with an outlook to 2050​

Battery cost forecasting: a review of methods and results with an outlook to 2050 - Energy & Environmental Science (RSC Publishing) DOI:10.1039/D1EE01530C

 

[Diogenese]

Perhaps this will help with the calculation and prediction?

It says here that the anode accounts for 9% of the costs.

Analyzing the Cost of an Electric Vehicle Battery Cell | Automotive Cells Company

ACC’s mission is to accelerate sustainable mobility for all. For all… Not for a few happy privileged people. For everyone!

www.acc-emotion.com

And here is a very detailed analysis of the costs.

Battery cost forecasting: a review of methods and results with an outlook to 2050​

View attachment 72818

Battery cost forecasting: a review of methods and results with an outlook to 2050 - Energy & Environmental Science (RSC Publishing) DOI:10.1039/D1EE01530C

Hi cosors,

The 10% figure is based on a graphite anode:

The Anode is another crucial component of the battery, accounting for approximately 10% of the total cost. The anode in a Li-ion cell is usually made of natural or synthetic graphite, which tends to be less expensive than other battery commodities

I would expect that a Talnode-Si anode would command a higher price in line with the increased capacity.

Talnode-Si consists of small "pellets" of Si encased in graphire and grphene consolidated by a binder.

As I've mentioned before, I expect that Talnode-Si will be a quite significant product for Talga, as the additional capacity will provide additional mileage/kilometreage, which is the holy grail of EV makers.