HRR - Updated NPV calculation, page-2

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05/02/18

19:30

Post #: 30835072
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Originally posted by mmoore1957 ↑

HRR's track record has cast a cloud over it which has obscured the strong fundamentals inherent in this company particularly at current Zn prices. I've updated their DFS (ASX release 29/6/16) to highlight the golden beast within.
A. UPDATED HRR NPV:
1. DFS Zn price = US$1.01/lb. New price = US$1.60/lb
2. DFS Cu price = US$3.00/lb. New price = US$3.20/lb
3. DFS Pb price = US$0.91. New price = US$1.20/lb
4. DFS AUDUSD = 0.71. New rate = 0.80
5. DFS Post tax NPV(8%) = A$207m. NEW Post tax NPV(6%) = A$515m
B. UPDATED HRR VALUATIONS:
1. New FCF = A$110m
2. FCF Valuation = A$110m x 10 times = A$1100m OR A$4.18 PFDS (HRR's current LOM = 9.2 yrs. I'm assuming they can increase LOM>10 yrs so using FCF multiplier = 10 times OK)
3. New NPV = A$515m
4.NPV = A$515m/263m shares = A$1.96 PFDS

So HRR's valuation range is A$1.96 to A$4.18. Once in full production and all the BFS assumptions have been validated I would expect the SP to move closer towards the top end of the valuation range.
HRR's current SP = A$0.80 so there does appear to be opportunity for a significant re-rate in HRR's SP within the next 12 months.
Please DYOR

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Yes I did some very similar figures the other day .
Should move in that $2-4 direction all going well but whether it gets all the way there in 12 months remains to be seen .
Quite a bit of upside I think with LOM so if managed well should go higher than that in say 3-4 years !
Franked divi's at that stage would also help and can't see after a few years why they can't !

HRR Price at posting: 77.5¢ Sentiment: Buy Disclosure: Held
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HRR - Updated NPV calculation, page-2

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