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Mctrain

370 Posts.

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17/10/17

12:40

Post #: 27962511
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Originally posted by binwood ↑

It's hard to say. GXY are currently trading on something like a 25x multiple of pre-tax profits. Let's say even 1bn of their current MC is based on Mt Cattlin and they have $400m of speculative value attributed to SDV/JB.

Based on the quarterly just released they made $14m profit pre-tax. So call that $56m annualised. Would still give them an 18 multiple.

If you took a conservative look for AJM, let's assume we are producing close to nameplate by the end of 2018 and producing 200kt. Let's say we are producing for USD$350 and receiving USD$850. So that gives us USD$100m or AUD$125m (fx at 0.80 - conservative side).

Let's say after depreciation, interest, corporate costs etc we are left with AUD$90m. I am not sure what tax credits we have vs GXY so we might have to compare our post-tax to their pre-tax as they have credits for some time. So say $65m post tax earnings. If we apply the same multiple of 20 that gives us a valuation of $1.3bn + expansion speculation = $1.5bn+

Now I am not saying I expect this or that it will necessarily happen but that is how I see the logic based on your question.

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I don’t think you could have answered that question any better.
Appreciate it cheers

AJM Price at posting: 29.0¢ Sentiment: Buy Disclosure: Held

PLS Price at posting: 84.0¢ Sentiment: Buy Disclosure: Held
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