Updated 20 January 2020
| Long-Term Price Case | $65/lb. U308 |
| Flagship Project | Norasa |
| Mineral Reserves | 90.7 Mlbs. |
| Shares Outstanding | 166,900,000 |
| Market Cap | $16,656,620 |
| Average Annual Production | 5.2 Mlbs. |
| Recovery | 92.4% |
| LoM | 15 Years |
| Payable Product | 77,800,000 lbs. |
| True All-in Cost (TAIC) | $55.16/lb. |
| Gross Revenue | $5,057,000,000 |
| Royalty | ($151,710,000) |
| Gross Income | $4,905,290,000 |
| Total Operating Costs | ($2,701,216,000) |
| Operating Profit | $2,204,074,000 |
| Income Taxes (37.5%) | ($826,527,750) |
| Total Capital Costs | ($612,100,000) |
| Net Income | $765,446,250 |
| Net Profit Margin | 15% |
| Absolute Cost Structure (ACS) | 85% |
| MTQ Score (Higher is Better) | 0.2 |
| True Value | $4.59/sh. |
| True Value Discount (TVD) | 98% |
| Cash Flow Multiple | 5x |
| Annual Cash Flow | $51,168,000 |
| Future Market Cap | $255,840,000 |
| Future Market Cap Growth | 1,282% |
| Target | $1.53/sh. |
Notes: All Values in U.S. Dollars
Like GoviEx, Forsys Metals needs to bide its time for substantially higher uranium prices. Though the economics technically work at the Base Case ($65/lb.), the Net Profit Margin is too thin. To be successful, the Net Profit Margin needs to rise above 30% and the Absolute Cost Structure needs to drop below 70%, which implies a spot uranium price of $80/lb.
So where is the value?
The Forsys Metals value proposition stems from a discrepancy between share price and True Value, as the present discount to True Value is 97%. Similarly, the value proposition for Bannerman Resources stems from its 97% discount to True Value, as opposed to value being derived from Net Profit Margin or Absolute Cost Structure, neither of which are particularly good at a Long-Term Price Case of $65.
Conclusion
We take it for granted that the merits of the Forsys Metals story have not gone unnoticed and that it is daily becoming more ripe as an acquisition target. Naturally we’d like to witness and profit from Market Cap growth up to 1,282%, but we would also be delighted to learn that the Norasa Project had found a good home on an acquirer’s long-term development schedule.
