Updated Projections31 Oct 2019 23:48
Evening all, still a long way off the finished article due to watching too much rugby and drinking too much beer, but thought it worth posting to lift the mood going into the weekend.
https://1drv.ms/x/s!Art3fOvTbZE8sXzueT6xos7asWPg?e=RqiT3j
Clearly I have had to make a few assumptions, including gold and silver prices, production levels and exchange rates to derive the revenue from Kiziltepe for the remainder of this year and through next year. Further work is required beyond this on both Kiziltepe and Tavsan.
i have projected Tavsan mining to start from Q4 2021 assuming base line studies of 12 months will commence this quarter and mine construction will take less than a year.
Still not happy with the doubling of admin costs in H1 2019, but I have assumed that this incorporates one-off costs to set up the in-house lab and H2 costs will be in line with the previous year. Feel free to make your own assumptions on this one. I have allowed for increased costs going forwards.
Amortisation of mine costs continue to be based on of the original mine cost of £32m apportioned by dividing annual production by the original LOM production target of 160K oz of gold.
Finance costs have also been a bit of stumbling block, but I have concluded that the repayment of the interest or 'profit' element of the construction loan started earlier than the capital element (based on the original RNS information) and most of the loan repayment is now capital only. In addition, I have allowed for interest on the working capital loan and loans from JV shareholders.
Finance income for the year is the same as the amount received in H1 as I am still assuming that the total strategic investment support is capped at 50m YTL and the cap has now been reached.
Lastly, corporation tax payable in Turkey at 20% will now have kicked in as cumulative profit has now exceeded 50% of the original mine investment cost i.e £16m so any profit over this level will attract CT at the full rate in accordance with the strategic investment support levels.
This gives a profit after tax level of approx £12m with Ariana's share being £6m for the year.
I have tried to give some idea of how this will impact cash with assumptions about loan repayments for the Tavsan mine development, acquistion of Kizilcukur by the JV and potential dividend payments by the JV to Ariana and Proccea. All highly speculative in terms of value and timing, but the bottom line is that cash generated presents plenty of options.
Lastly, I have tried to give an indication of the forecast profit each year and how Ariana's share increases their profit, assuming it's own costs remain broadly in line. I have then simply drawn some conclusions as to how this increased profit level might increase the market cap of the company based on an initial PE ratio of 10 rising to 12 as Tavsan comes on stream and, assuming shares in issue remains the same, what the effect will be on the future share price.
Cheers, Ash
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