First Read: Daily Commodities Note "China Cuts Japan From Heavy Rare Ear..."

Research evidence excerpt

First Read: Daily Commodities Note "China Cuts Japan From Heavy Rare Ear..."

Valuation Method and Risk Statement

We point out to investors the potential risks inherent in the mining sector that affect

investments in the sector, including, but not limited to, the volatile nature of commodity

prices and currencies, which may differ materially from expectations. Furthermore, the sector

is exposed to political, financial and operational risks, each of which has the potential to

significantly impact company/industry performance. Our valuations for the mining sector are

derived using a DCF methodology or combined DCF and EV/EBITDA.

Alcoa Corp:

Alcoa is subject to relatively high volatility and several risk factors. These include but are not

limited to commodity price volatility; regulatory changes; production disruptions; labor issues;

equipment delays; unfavorable weather and more. Our valuation employs a target EV/NTM

EBITDA multiple, backed up by a DCF valuation.

IGO:

Investment risk inherent in the resource sector includes, but is not limited to, movement of

commodity price and currency which may differ materially from the assumptions used in this

report. Furthermore the sector is subject to political, financial and operational risks, each of

which has the potential to significantly impact industry performance. Our price target is based

on a DCF methodology, and uses a WACC of 10% for the lithium business and 8% for the

base metals business.

Liontown:

which has the potential to significantly impact industry performance. Our price target is

derived using SOTP DCF methodology and a 10% discount rate. The lithium industry is an

new and rapidly developing mining sector and brings added risks due to the volatility of this.

Mineral Resources:

report.