We all know we can be bought out before production starts and by the value and cashflow this company will have, that is certainly a possibility. However, not sure it will give us shareholders the best bang for our buck. A buy out would give us less risk and there is a value for that. However, if we mine this ourselves, I think the ROI is going to be much higher because I believe the market will not give us a fair value and the buy out valuation will be based on the share price.
If we do mine this ourselves, I will spit ball some numbers here to ponder. Let's say we get an end user or 2 to finance the build out of the mine for $200M. For that, they get a total of 10,000 tons of finished product per year for 20 years. At $9000 per ton, that is $90M ROI per year. That would be a fantastic deal for them and we know that we are more than generous in this deal. I think we can negotiate a better deal but I think it is safe to say we could get at least a similar deal or better.
With production of 100k tons per year, that would leave us 90k tons of production at let's say conservatively $7000 of gross margin per ton. That would yield $630M in profits. Let's leave half of that for G&A and taxes and say the rest goes to dividend. That would give us $315M in dividend per year over say 60M shares. That would be $5.25 per share.
With a yield of 10%, making our shares price $50, that would attract a whole different set of institutional investors. The sustainability of this would be determined by the tonnage of course. At a 5% graphite content, you would need 2M tons per year to meet 100k tons of finished product. If we have 20M tons, that would be 10 years, 40M tons 20 years, 100M tons would be 50 years!
Goro, trading in the US did exactly that, turning their gold mine into a dividend fund very early in the mining process. I think they announced their plans for this dividend during the PEA stage or maybe the BFS stage. Anyway, you can still pull up their chart. Once they announced this dividend plan, their share price went from $2 to $30 in 2 years. So I think as shareholders, it would be a good conversation to have.