RE: Late sells6 Jan 2019 16:54
Afternoon.
Someone asked me to flesh that out so here goes:
Based on guesstimated DFS NPV values as below then I'd expect the post-DFS floor on the SP here to be around the current price.
That's taking into account the current Copper price @ c$2.6 - not at $3.
Without seeing the details of the MOD DFS and their desired £50m funding that's about as much as I can say.
I suspect the real +-ve leverage factor though is the Copper price.
I strongly suspect that Copper at mid $2s effectively halves the NPV compared to $3 such is the power of that leverage on the financial metrics of the T3 project.
That, currently pricing-in, weakness is what I would expect the "market" to try to take advantage of and use over the next six weeks or so to try and drop the respective SPs a bunch more ahead of that DFS dropping because then there's going to be an incontrovertible hard floor published for all to see and apply the prevailing Copper price to in real-time going forward.
Recognise, however, that the Copper price leverage works both ways such that whatever the bottom mcap ends up being at $2.5, it probably doubles at $3 and triples at $3.5 and that's very tasty indeed when you've got to do nothing else at all but watch the market respond to the prevailing Copper price and its effect on your known project financials ...
That's obviously the investment opp shout and I'm pretty confident of what I'm suggesting there in terms of leverage.
Clearly, if the Copper price dives below, say $2.4, then it could get ugly pretty quickly, even from the current valuations but if you're a long-term Copper buyer based on what appear to be really quite phenomenal fundamental supply/demand tailwinds over the coming year(s) then it could get very, very special to the upside too - put Copper at $4+ and you're talking NN-Bagger City, Arizona.
One other note: this is all based on what I assume would be a c$300m DFS NPV @ $3 Copper from just the T3 pit feeding the plant of course. It is perfectly possible that MOD are able to delineate another resource at T4/wherever else in 2019 to boost that number substantially and with respect to MTR, a possible $kerching event on that new resource being scoped if MOD want to buy them out of their 30% of it.
That's about all I've got without going into the real nitty gritty breakdown of the financials as I see them but one other point someone asked about - I don't see MOD raising below 15p unless I've got my numbers dead wrong and/or the Copper price collapses in which case I'd expect them to not raise at all and go dormant until the price improves.
HTH
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