Ibaera has spend a lot of money and increased AZM's reserves/resources and improved the Feasibility Study in respect of capex and opex - and NPV.
Granted that AZM will own a smaller percent of the project, its much closer to a development decision now and with much better financial metrics.
If (as I suspect) Ibaera finish spending and then want to sell, they would want a significant multiple of the funds outlayed - or they are pretty hopeless at Private Equity (PE) players.
Usually, PE guys hold assets for 1-3 years and are looking for a 100-200% uplift.
If that were to be achieved, the Ibaera's US$11.25m would need to be up-valued to US$22.5-35m as a result of drilling and evaluation work.
If that is the value on 42.5% of the asset, then AZM's 57.5% share should be worth US$30.4m - US$47.5m.
If we use an exchange rate of say US$0.71, the AZM's holding should be valued at A$42.8m - US$66.9m
On a per share basis assuming Issued Capital of 782m shares, the uplifted valuation of AZM's retained 57.5% stake should be worth say 5.5c - 8.5c.
So, if the Ibaera boys can get a 100-200% uplift in valuation of their investment, then AZM shares are a damn steal at 2.7c.
The only question is whether team Ibaera can get a buyer for their stake at the increased valuation and what would AZM do with its reduced JV stake.
One would hope that they will sell and return funds to shareholders.
Given that Ibaera is part way (maybe 70%) through its spending commitments, they must be starting to think about how to cash out.
2019 could be a great year for shareholders.
The AZM company presentations show how AZM's valuation compares with its peers - all we need is a catalyst for a 100% plus re-rating.
All aboard!!!
AZM Price at posting:
2.7¢ Sentiment: Buy Disclosure: Held
