SGA Pre Feasibility Study released
Sarytogan Graphite (ASX: SGA) just put out its Pre Feasibility Study (PFS).
Today’s news has been years in the making - for highest grade and second biggest contained graphite resource on the ASX.
And now we get a first look at the potential economics of SGA’s project:
It was interesting to see SGA breakdown the PFS into four different stages where it can scale up the project depending on market conditions.
The starter development sees NPV of US$151M for CAPEX of just US$62M.
AND NPV climbs to US$518M by Stage 2A - for total CAPEX of US$256M.
SGA’s current market cap is just ~$23M which means the company is trading at ~10% of its stage 1 NPV of US$151M ($230M)…
AND at less than 3% of its stage 2a development scenario.
Now that SGA has project economics backing up its project we are hoping the market re-rates SGA to a level that is more in line with valuations we typically see for companies with feasibility studies released.
Usually that multiple is a lot higher than <3% of the fully developed PFS Net Present Value.
Of course there is no guarantee that this will happen, as investors stay
SGA put out a really good video which gives a good overview of its project and the PFS here:
How does today's news impact our SGA Investment Memo?
Objective #3: Commence Scoping Study on project economics and feasibility
Commence scoping and feasibility studies on its project. We think this will likely be in the form of a “Scoping Study” in the first instance.
The results of objectives #1 and #2 will constitute key inputs into any feasibility and economic study.
Milestones
✅ Begin preliminary economic assessments
Source: “What do we expect SGA to deliver” 22 July 2022 SGA Investment Memo
Initially we had wanted to see SGA put out a scoping study for its project.
Todays PFS is over and above the expectation set as part of our Investment Memo back in 2022.
What’s next for SGA?
SGA had a slide in today’s presentation which laid out the next steps for its project.
Almost all of these are precursors for a Definitive Feasibility Study (DFS).
SGA also mentions that mining permits will be an area of focus next.
