RE: Hi Sasa17 Aug 2018 12:27
Hi Potatohead - just seen your post...
The question you raise is very difficult to answer at this juncture, i.e with no funding programme secured, as yet and prior to the TEO / PFS being prepared - maybe we'll have sight of this by Christmas?
As a loose guide as to the overall, you might want to look at the 28th June RNS where the Co. estimates a possible EBITDA calculation over the envisaged life of the mine when they're able to have the wherewithal to mine the stuff.
In that RNS, they're looking at a possible EBITDA over the LOM of 15 years of some $2.7 bn (toll) or $4.7bn (own smelter) - as you probably know, they lose all the value of the peripheral metal value in the former but benefit from everything they have where they might own their own smelter (cost $250m odd?) - that's for Measured / Indicated.
When the Inferred resource is included, the LOM is extended to 23 years and the toll EBITDA expectation rises to $3.7bn over the LOM and the own smelter option increases to $6.7bn.
Personally, I've always taken a rather jaundiced view about the use of EBITDA metric but it's an Industry standard nowadays, so it'll have to do.
There are many variables to ponder here before trying to gauge what sort of revenues might be generated once in production (type of loan terms arranged, off - takes if agreed, toll smelter or no, Ni price etc, to name but a few) but if you take an average of the above, a very rough indicator might be an EBITDA of some $3.5bn over 20 years LOM (assuming a high 'inferred' conversion rate to 'Measured and Indicated' is achieved henceforth) so that would give an EBITDA of $175m p.a average or 27p eps as of the current float.
With no tax charge for five years, we're informed, one could reasonably conclude the EBITDA per share to be fairly 'clean', i.e as net distributable (initially anyway) and as such, the eps of 27p would likely sell on a 4 or 5 x multiple, I'd guess, in the present climate - hence the £1 ps I ascribe to this, as things stand.
Also, fwiw, my WD 'short cut' NPV calc. I use to estimate this figure comes out comfortably above 100 ps right now and the mkt tends to discount this by around a running 50% - 70% (the latter where a good chance of a T/O exists) so that points to around 90p ps, too, coincidentally....
Anyway, I hope this helps - it is somewhat hastily cobbled together, admittedly, as I have to dash out shortly but I'm sure better informed posters like Red, Vertigo, TDT, Schach, etc., will highlight any obvious errors I've made - sasa.
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