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Not enough space.
[Current exchange rate 1.4].
CONCLUSION:
One can use a useful metric of the current bank valuation to counter check with the actual modelled EBITDA and net profit.
A/c to the latest bank valuation, it is US$ 4 2 . 8 5 MILLION per year over 14 years = US$600m valuation presumably for whole of life mine VS $68 million [100% share] NET profit AFTER tax, depreciation and amortization @$61/t average.
One can only conclude that the bank takes in a GREATER MARGIN which is norm so that they have a degree of safety for obvious reasons.
So, I have demonstrated in full, the HYPOTHESIS in the REAL WORLD of investment banking valuations vs KDNC modelling [or rather the JV] vs folks current IRON ORE PRICE MODELLING.
WHO WILL PROVE RIGHT OVER THE NEXT 17.5 YEARS [18 mths for shipping + 18-24 mths for scoping study and recommissioning and then 14 years of whole of mine life]?
That is a question that can only be ANSWERED IN THE FULLNESS OF THE END OF 17.5 YEARS from today ie Feb 28, 2021.
That is for EACH legacy investor in REM and new investors to decide on. Legacy investors themselves on the main forum that their objective is to get back their original capital investment. New investors have expressed that they want to be x, y and z so that is also up to them.
However, the figures are counter-checked to see HOW all the VARIOUS FIGURES PLAY OUT.
Zamin bought Amapa for US$240-250m post the port accident - I am sure they took a valuation as norm.
I am having a cup of tea but thought it best to give SOME BACK-UP of REAL-LIFE VALUES from the latest valuation report on Amapa DESPITE THE INVESTMENT BANK COGNISANT THAT THE PRICE OF IRON ORE IS HIGHER THAN $61/t modelled. However, investment banks or banks will not take the HEIGHT OF THE IRON ORE PRICE to model but rather they have their own modelling systems taken over the various cycles vs economic cycles etc.
Otherwise, there could be unhappiness over NOT TAKING US$175 /t for iron ore which is at the moment as folks could WONDER WHY CANT ONE TAKE TODAY*S HIGHEST PRICE FOR THE NIEXT 17.5 YEARS? If prices go even higher that could be the effect of inflation? At the momo, everyone is not entirely sure how this is going to play out?
Sun, 28 Feb 2021.
Thought it best to clarify.
In his Christmas [ Dec 2020] tips, Alan Green mentioned that Amapa has had a NEW VALUATION.
I gather that the Joint Venture has sought a new valuation for Amapa presumably from a Tier 1 investment bank.
Alan Green did NOT disclose what this new valuation was. However, in the latest Kiran Mozaria, CEO interview with *************, he mentioned Amapa $600m. So, I am assuming that this could be the new valuation. However, if not sure listen to the interview or ask Mr Mozaria if it is correct to think this is the latest valuation for Amapa?
Given that Amapa has a MINE LIFE OF 14 YEARS, that appears to show that the valuation of US $600m for 100% interest = US$ 4 2. 8 5 million a year [600 divided by 14 ?
From the given @14:20, Sat, 28 Feb 2020 post:
"Average net revenue $266m
Average EBITDA $136 million per year.
At full production using US$61/t."
As said US$136m per year EBITDA does not take into account TAXATION to the authorities.
In one of the pure iron ore co*s I checked some time ago, their accounts showed that from EBITDA to final NET PROFIT shaved off another 45%. Each country*s TAXATION is different, so I assumed that to take off 50% is safest to take in everything possible.
So, that means that the JOINT VENTURE CO [100% Amapa] could have US $ 68 million to distribute. However, in practice, the JV CANNOT DISTRIBUTE 100% as it needs to RETAIN SOME WORKING CAPITAL.
VALUATION:
If it is correct that the NEW VALUATION is US$600m, then it was taken at a time when iron ore prices were already around US$140/t. Even then, the investment bank would NOT give a valuation that reflects CURRENT iron ore prices prevailing at the time the VALUATION was sought recently. Why is that? Investments banks have all the data of iron ore prices over X no of years etc.
Amapa was once valued at US$1 billion from recall [around this region + -] prior to the PORT accident.
So, for investors of iron ore via Amapa, they appear to be taking a "bet" on iron ore prices staying high for the NEXT 14 YEARS without any FALL in prices once Amapa has been RE-COMMISSIONED [18 mths shipping stock piles and another 18-24 mths to do scoping study and recommissioning].
Hence, for that reason, the model was for US$61/t. Whether that has been revised, folks can ask KDNC?
COUNTER CHECK:
One can check the net profit attributable to KDNC [if 20% stake in Amapa].
Average EBITDA $136m [US$] per year. If 50% shaved off for tax, depreciation and amortization, that leaves US$ 68 million. I have seen one pure iron ore co shave off 45-47% for tax, depreciation and amortization some time ago so kindly check if one can find a listed co that sells iron ore from Brazil to get a more specific country %.
KDNC could then get US$ 1 3 . 6 million if prices modelled is for US$61/t.
If, it is average of US$120/t over the whole LIFE OF MINE @14 years averaged out, then, it could be in THEORY US$ 2 7. 2 million OR £ 19. 42 MILLION [current ex