This section presents the full re-underwritten ten-year financial model. Sponsor revenue and EBITDA are preserved exactly; depreciation, financing, tax, the balance sheet, cash flow, coverage and returns are independently derived, and the full net-profit path, which the sponsor provides only for stabilised Year 10, is built here. The model is fully integrated, the balance sheet reconciles to zero in every year, and denominated in US dollars. For readability, the projection tables are presented in two five-year blocks.
12.1 Key assumptions
|
Assumption |
Basis |
|---|---|
|
Revenue & EBITDA |
Sponsor 10-yr projections preserved ($35m→$740m; 12%→28% margin) |
|
Depreciation |
~12-yr blended life on the steel-plant & equipment base |
|
Senior debt (DFI + commercial) |
$140m at 9.0%; grace then amortising |
|
Phase-3 expansion debt |
$150m additional (multi-site) — see capital finding |
|
Working-capital facility |
$40m commercial line |
|
Tax |
27% with assessed-loss carry-forward (SA corporate rate) |
|
Working capital |
DSO 50 / DIO 55 / DPO 40 days (inventory-heavy) |
|
Terminal value |
Exit at 5.0x EBITDA (within sponsor EV range) |
Table 12.1 Principal modelling assumptions.
12.2 Projected income statement
Years 1–5.
|
US$ million |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|---|---|---|---|---|---|
|
Revenue |
35 |
70.0 |
130.00 |
200.000 |
290.0000 |
|
Operating costs |
(31) |
(60) |
(107) |
(160) |
(226) |
|
EBITDA |
4 |
10.5 |
23.40 |
40.000 |
63.8000 |
|
Depreciation |
(10) |
(18) |
(25) |
(27) |
(31) |
|
EBIT |
(6) |
(8) |
(1) |
13 |
33 |
|
Net interest |
(3) |
(10) |
(14) |
(20) |
(22) |
|
Profit before tax |
(9) |
(17) |
(15) |
(7) |
11 |
|
Tax |
(0) |
(0) |
(0) |
(0) |
(0) |
|
Net profit (re-underwritten) |
(9) |
(17) |
(15) |
(7) |
11 |
Years 6–10.
|
US$ million |
Year 6 |
Year 7 |
Year 8 |
Year 9 |
Year 10 |
|---|---|---|---|---|---|
|
Revenue |
380 |
470.0 |
560.00 |
650.000 |
740.0000 |
|
Operating costs |
(289) |
(353) |
(414) |
(475) |
(533) |
|
EBITDA |
91 |
117.5 |
145.60 |
175.500 |
207.2000 |
|
Depreciation |
(36) |
(41) |
(45) |
(49) |
(53) |
|
EBIT |
56 |
77 |
100 |
126 |
155 |
|
Net interest |
(23) |
(23) |
(23) |
(21) |
(17) |
|
Profit before tax |
32 |
54 |
78 |
105 |
138 |
|
Tax |
(0) |
(13) |
(21) |
(28) |
(37) |
|
Net profit (re-underwritten) |
32 |
41 |
57 |
77 |
100 |
Table 12.2 Projected income statement (re-underwritten below EBITDA). Losses in parentheses.
Key findingThe full profit path is re-underwritten — and corroborates the sponsor’s Year 10
The sponsor gives a net-profit line only for Year 10 ($91m). Re-underwriting all ten years, applying depreciation on the building plant base, cash interest across senior, Phase-3 and working-capital debt, and 27% tax with loss carry-forward, produces net losses through Years 1–4 (peaking near –$17m), turning to profit from Year 5 and reaching roughly $100m by Year 10.
That $100m corroborates (indeed slightly exceeds) the sponsor’s $91m, a reassuring independent check on the stabilised economics. The essential addition is the early-year loss path, which the sponsor’s single-year snapshot omits: these losses, and the cash burn behind them, are the core of what must be financed and underwritten.
12.3 The J-curve & capital adequacy
Unlevered free cash flow is deeply negative early (about –$117m and –$86m in Years 1–2), and cumulative cash reaches a trough of roughly –$257m around Year 3 before the business turns cash-generative. This J-curve, and the total capital required to fund it and the full build, is the central financial question.
Key findingCapital adequacy — the full multi-site build needs more than the $280m base case
Two signals point the same way. First, the cumulative-cash trough (about –$257m) sits close to the indicative $300m committed stack, leaving little headroom, and funding the full build takes total capital toward $450m, modelled here as the committed stack plus a $150m Phase-3 debt tranche, above the top of the sponsor’s $220–350m envelope. Second, the sponsor’s own Year-10 depreciation (~$55m) implies an asset base far larger than $280m, consistent with total capex of roughly $630m once the multi-site Phase-3 build is complete.
The honest reading: this is a ~$450–630m programme presented with a $280m base case. The committed stack funds Phases 1–2 and initiates Phase 3; the full multi-site build requires a substantial further capital plan. Lenders and investors should size committed and standby funding to a stress-case trough and treat the $740m revenue trajectory as contingent on that additional capital. This is the most important structuring issue in the transaction, though, at this scale, a more manageable one than for larger megaprojects.
12.4 Projected balance sheet
Years 1–5.
|
US$ million |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|---|---|---|---|---|---|
|
Net PP&E |
111 |
188.9 |
241.90 |
243.900 |
258.9000 |
|
Inventory |
5 |
9.0 |
16.10 |
24.100 |
34.1000 |
|
Receivables |
5 |
9.6 |
17.80 |
27.400 |
39.7000 |
|
Cash |
12 |
12.0 |
12.00 |
12.000 |
12.0000 |
|
Total assets |
132 |
219.5 |
287.80 |
307.400 |
344.7000 |
|
Senior debt (DFI+commercial) |
70 |
115.0 |
126.00 |
112.000 |
98.0000 |
|
Phase-3 expansion debt |
0 |
0.0 |
0.00 |
40.000 |
80.0000 |
|
Working-capital facility |
12 |
28.0 |
69.50 |
63.000 |
54.6000 |
|
Payables |
3 |
6.5 |
11.70 |
17.500 |
24.8000 |
|
Deferred tax |
0 |
1.1 |
2.10 |
3.200 |
4.4000 |
|
Equity |
46 |
69 |
79 |
72 |
83 |
|
Total equity & liabilities |
132 |
219.5 |
287.80 |
307.400 |
344.7000 |
|
Balance check |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
Years 6–10.
|
US$ million |
Year 6 |
Year 7 |
Year 8 |
Year 9 |
Year 10 |
|---|---|---|---|---|---|
|
Net PP&E |
281 |
299.8 |
310.80 |
309.600 |
296.9000 |
|
Inventory |
44 |
53.1 |
62.40 |
71.500 |
80.3000 |
|
Receivables |
52 |
64.4 |
76.70 |
89.000 |
101.4000 |
|
Cash |
12 |
12.0 |
12.00 |
12.000 |
14.2000 |
|
Total assets |
389 |
429.3 |
461.90 |
482.100 |
492.8000 |
|
Senior debt (DFI+commercial) |
84 |
70.0 |
56.00 |
42.000 |
28.0000 |
|
Phase-3 expansion debt |
115 |
140.0 |
128.60 |
107.200 |
85.8000 |
|
Working-capital facility |
37 |
29.7 |
39.50 |
32.700 |
0.0000 |
|
Payables |
32 |
38.6 |
45.40 |
52.000 |
58.4000 |
|
Deferred tax |
6 |
7.4 |
9.20 |
11.200 |
13.3000 |
|
Equity |
115 |
144 |
183 |
237 |
307 |
|
Total equity & liabilities |
389 |
429.3 |
461.90 |
482.100 |
492.8000 |
|
Balance check |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
Table 12.3 Projected balance sheet. The balance-check row confirms the model ties to zero every year.
12.5 Projected cash-flow statement
Years 1–5.
|
US$ million |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|---|---|---|---|---|---|
|
Operating cash flow |
(5) |
(4) |
0 |
10 |
28 |
|
Investing cash flow |
(121) |
(96) |
(78) |
(29) |
(46) |
|
Financing cash flow |
137 |
101 |
78 |
20 |
18 |
|
Net change in cash |
12 |
0 |
0 |
0 |
0 |
|
Unlevered FCF |
(117) |
(86) |
(54) |
11 |
18 |
|
Cumulative FCF |
(117) |
(202) |
(257) |
(246) |
(228) |
Years 6–10.
|
US$ million |
Year 6 |
Year 7 |
Year 8 |
Year 9 |
Year 10 |
|---|---|---|---|---|---|
|
Operating cash flow |
54 |
68 |
89 |
113 |
140 |
|
Investing cash flow |
(58) |
(59) |
(56) |
(48) |
(40) |
|
Financing cash flow |
3 |
(8) |
(33) |
(65) |
(98) |
|
Net change in cash |
0 |
0 |
0 |
0 |
2 |
|
Unlevered FCF |
34 |
45 |
69 |
99 |
130 |
|
Cumulative FCF |
(194) |
(149) |
(81) |
19 |
149 |
Table 12.4 Projected cash-flow statement. The cumulative-FCF row traces the J-curve.
12.6 Funding structure
The indicative $300m committed stack is 40% equity ($120m industrial equity), with $140m of DFI and commercial senior debt and a $40m working-capital facility. This is a robust equity base for a green-field manufacturing build, the equity is sized to absorb the early losses the J-curve produces. No detailed stack was specified by the sponsor; this structure sits within the stated $220–350m envelope.
StrengthThe equity base is a real strength — the total quantum is the question
At 40%, the indicative equity is well-sized to absorb the early losses before the business turns, which de-risks the early period for lenders and is a genuine credit strength. The caveat is not the equity ratio but the total quantum of capital: the committed stack is calibrated to Phases 1–2, so while the mix is right, the total must grow, with a matching equity contribution, to fund the full multi-site build.
12.7 Debt profile & coverage
Years 1–5.
|
Metric |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|---|---|---|---|---|---|
|
CFADS (US$ m) |
4 |
9 |
21 |
36 |
58 |
|
Debt service (US$ m) |
3 |
8.3 |
25.50 |
27.200 |
29.8000 |
|
DSCR |
1.13x |
1.10x |
0.82x |
1.32x |
1.95x |
|
Gross debt / EBITDA |
19.57x |
13.62x |
8.35x |
5.38x |
3.65x |
|
Gearing (%) |
64.1% |
67.5% |
71.4% |
75.0% |
73.7% |
Years 6–10.
|
Metric |
Year 6 |
Year 7 |
Year 8 |
Year 9 |
Year 10 |
|---|---|---|---|---|---|
|
CFADS (US$ m) |
84 |
95 |
114 |
134 |
155 |
|
Debt service (US$ m) |
32 |
33.7 |
55.50 |
52.600 |
49.4000 |
|
DSCR |
2.60x |
2.82x |
2.05x |
2.55x |
3.14x |
|
Gross debt / EBITDA |
2.59x |
2.04x |
1.54x |
1.04x |
0.55x |
|
Gearing (%) |
67.2% |
62.5% |
55.0% |
43.4% |
27.0% |
Table 12.5 Coverage and leverage. Senior debt carries a construction grace.
Key findingCoverage is thin through the build, then strong — grace and reserves are essential
Through the construction and ramp years, coverage is thin, early DSCR sits around or below 1.0x because EBITDA is small while the asset base and debt build. This is inherent to a green-field build: early debt service leans on the debt-service reserve, the construction grace and the equity buffer rather than operations. Structuring this explicitly, grace, a funded DSRA and interest-during-construction, is essential.
From around Year 4–5 onward, as EBITDA scales, coverage strengthens rapidly, with DSCR rising above 2x and gross debt/EBITDA de-levering below 1.0x by Year 10. The credit profile transforms from reserve-supported in the build to strongly self-supporting at maturity, provided the utilisation and consumables-margin ramp arrive as planned.
12.8 Break-even & scenarios
|
Scenario |
Y10 revenue |
Y10 EBITDA |
Assessment |
|---|---|---|---|
|
Upside |
$814m |
$244m |
Faster ramp, stronger consumables mix |
|
Base case |
$740m |
$207m |
Sponsor plan preserved |
|
Downside |
$607m |
$146m |
–18% volume, –4pp margin |
Table 12.6 Scenario summary (Year 10).
12.9 Project returns & valuation
|
Return metric |
Base case |
Conservative |
Sponsor |
|---|---|---|---|
|
Project IRR |
25.3% |
23.0% |
16–21% |
|
Project NPV @ 11.8% (US$ m) |
290 |
222 |
— |
|
Exit enterprise value (US$ m) |
1,036 |
— |
950–1,300 |
|
Exit equity value (US$ m) |
936 |
— |
700–1,050 |
|
Payback (cumulative FCF) |
~Year 9 |
~Year 9 |
~7 years |
Table 12.7 Project returns and valuation. Terminal at 5.0x Year-10 EBITDA (within the sponsor’s implied EV range).
StrengthReturns clear the cost of capital and corroborate the sponsor’s valuation
On the re-underwritten cash flows, the base-case project IRR of ~25% (and ~23% on a conservative terminal) clears the 11.8% cost of capital and meets or exceeds the sponsor’s 16–21% target, while the exit enterprise value (~$1,036m) and equity value (~$936m) sit within the sponsor’s stated ranges. The important qualification is capital: these returns assume the $740m trajectory is reached, which depends on the additional Phase-3 capital. Financed for the full build, and with scrap, energy and consumables execution managed, the economics are genuinely attractive, and the proven technology and recurring consumables demand make this a lower-risk profile than most green-field industrial ventures.
12.10 Base-case KPI dashboard
Years 1–5.
|
KPI |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|---|---|---|---|---|---|
|
Revenue growth |
— |
100% |
86% |
54% |
45% |
|
EBITDA margin |
12% |
15% |
18% |
20% |
22% |
|
Net margin |
-25.7% |
-24.4% |
-11.8% |
-3.4% |
3.9% |
|
Utilisation (%) |
30% |
40% |
50% |
58% |
65% |
|
DSCR |
1.13x |
1.10x |
0.82x |
1.32x |
1.95x |
|
Gross debt / EBITDA |
19.57x |
13.62x |
8.35x |
5.38x |
3.65x |
|
Cumulative FCF (US$ m) |
(117) |
(202) |
(257) |
(246) |
(228) |
Years 6–10.
|
KPI |
Year 6 |
Year 7 |
Year 8 |
Year 9 |
Year 10 |
|---|---|---|---|---|---|
|
Revenue growth |
31% |
24% |
19% |
16% |
14% |
|
EBITDA margin |
24% |
25% |
26% |
27% |
28% |
|
Net margin |
8.5% |
8.6% |
10.1% |
11.8% |
13.6% |
|
Utilisation (%) |
72% |
78% |
83% |
88% |
92% |
|
DSCR |
2.60x |
2.82x |
2.05x |
2.55x |
3.14x |
|
Gross debt / EBITDA |
2.59x |
2.04x |
1.54x |
1.04x |
0.55x |
|
Cumulative FCF (US$ m) |
(194) |
(149) |
(81) |
19 |
149 |
Table 12.8 Base-case key performance indicators.
12.11 Covenant & lender-protection framework
The financing is structured to protect the DFI-and-commercial consortium through the J-curve and to give lenders the monitorable controls appropriate to a capital-intensive manufacturing build.
|
Protection |
Proposed structure |
|---|---|
|
Construction grace |
Interest-only on senior debt through the build years |
|
Debt-service reserve |
DSRA funded to ~22m (forward debt service) |
|
Minimum DSCR covenant |
≥ 1.30x, tested from stabilisation (post-grace) |
|
Milestone drawdowns |
Capital released against verified commissioning milestones |
|
Standby / contingent capital |
Committed facilities sized to a stress-case trough |
|
Energy & offtake conditions |
Secured power and mine-supply contracts as drawdown conditions |
|
Security |
Plant, equipment, inventory, receivables, share pledges |
|
Distribution lock-up |
No distributions until stabilised, de-levered and reserves met |
Table 12.9 Proposed covenant and lender-protection framework.
StrengthThe structure protects lenders where the risk is greatest
The right framework for SSIC focuses on the build and the input risks: construction grace and a funded debt-service reserve carry the early years; secured-power and mine-supply-contract conditions gate drawdowns on the things that actually de-risk the plant; committed standby capital sized to a stress-case trough closes the adequacy gap; and the distribution lock-up ring-fences cash for debt service. With the substantial tangible-plant security, the recurring consumables demand and the strong stabilised cash flows, a facility structured this way is well-protected, and the moderate scale and proven technology make it more manageable than larger, frontier-technology industrial projects.