Esh, your calculations are too bearish. Let's use facts:
- approx 15koz less production this year - approx 30koz less next two years - at profit of 800AUD per oz, we're looking about about ~60m less NPAT, which is 20M per year
SBM debt free FCF is 145M, so that reduces it to 125M.
They will invest an extra 200M throughout LOM, which is 20M per year, for 10 years. This will not affect their FCF because they have 350M cash. If it does affect their FCF, it reduces 125M to 105M.
105M derives a fair value of ~$4.
Obviously nobody knows which way gold is going, so let's leave our crystal balls in the drawer.
Based on facts alone, we can see the market has mispriced SBM and panicked. Please share your calculations which prove otherwise.
SBM Price at posting:
$3.29 Sentiment: Buy Disclosure: Held
(20min delay)
