Lenox's strategy is to license most of the production out. So you are right, assuming most production is licensed out, Lenox would not receive most of the revenues from the usage of lignin in the foundry, plywood, and other markets. Oops. Getting carried away. I stand corrected.
So, we need to add a factor for their royalties on that income. I don't know what their agreements are for royalties. If we assume they are 10%, then my estimate needs to be reduced by that factor, and the stock, in the fantasy, is only a 100-bagger.
Notice, however, that I did not include an estimate for the usage of lignin resin in replacing plastics and urethane foams. Many of those products are still being developed. A wild guess would be that might add another 30% to the totals. Given the size of the estimation errors in all of this, that's still only worth calling it a 100-bagger.
Sorry for the error. Thanks for pointing it out!
As I think I mentioned in an earlier post, while Lenox's strategy is to license most of the production out, they are also shipping out of their factory now and looking into building a second factory that would have 5 to 10 times the capacity of the current one. Current factory capacity is 40,000 lbs/day. Suppose the new factory could do 1M lbs in 3 days, or 100M lbs/year. That would xlate into revenues, from that source, of $50-100M/year. Financing could be arranged in a number of ways, but since the new factory could be built for $1-2M, even if it was financed through additional stock, that wouldn't be terribly dilutive.
Regards,
-DT
Other comments, anyone?
P.S. I'll be away for at least a week beginning Saturday. Vacation.
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