RE: Top up2 Jun 2021 12:13
FYI, I'm still waiting to hear back from Turner Pope with regards to correcting the errors on our SOTP valuation:
1. 150M tonnes high-case was used, when should have been 245M tonnes.
2. The Iron Ore was halved to get 50% Fe, when it was already accounted for a grade range of 50-63% Fe (see page 28 of Company Presentation).
3. A super aggressive 80% discount factor was used, when it was stated in Research Note 6/5/21 & 20/5/21 an aggressive 60% discount factor was used.
Therefore the valuation for Hamersley should be:
Downside valuation - Low case tonnes:
74,000,000 tonnes
x£8/t = £592,000,000
x0.4 (to discount 60%, not 80%) = £236,800,000
x0.51 (UFO share) = £120,768,000 (not 30.2M as stated in SOTP valuation).
Upside valuation - High case tonnes:
245,000,000 tonnes (not 150M tonnes)
x£8/t = £1,960,000,000
x0.4 (to discount 60%, not 80%) = £784,000,000
x0.902 (UFO share) = £399,840,000 (not 61.2M as stated in the SOTP valuation).
Then they will need to calculate for 90% interest in Hamersley once finalised.