DYOR. Not Advice. Targets presented below are based on my...

DYOR. Not Advice.
Targets presented below are based on my research and calculations. You are encouraged to DYOR and make your own decisions.​

Reviewing my valuations for EGA.AX (originally posted here).

In summary:

• On peer analysis with developers (averaged) EAR.AX and CDN.AX we should be at $0.37 current fair valuation
• On peer analysis (averaged) against producers PNR.AX, DCN.AX and GCY.AX we can set a 18-month target of $0.87. Perhaps reasonable to see them producing at nameplate within 18 months.
• On an earnings basis using P/E 10.0 we can perhaps set a price target of $1.64 (30 month price target after payback)

Now the following producers are trading at P/Es (data sourced from Yahoo Finance):

• PNR.AX at P/E 14.4
• SAR.AX at P/E 32.0
• RRL.AX at P/E 14.2
• SBM.AX at P/E 10.3

So P/E 10.0 is perhaps a good conservative P/E to use for EGA.AX once they reach a steady run-rate equivalent to nameplate production and all debt has been paid off. So perhaps a 30 month price target for this ( assuming an 18 month payback and commissioning and ramp-up in 2020 ).

My earnings-based estimate suggests 5-6 bags of profit after payback (perhaps 30 months for this point). This is roughly what occurred for PNR over a 3-4 year period.

We may not see further dilution once they achieve finance (beyond items already identified in the 3B). They should have around $5M left in the bank at the end of the December quarter. Although ... will they try and give some upside to equity investors via a partial placement. But for now I am assuming no further dilution.

(Ignore interest and losses lines below - basis is all losses accounted for and all debt paid off. For simplicity just assumed depreciation and amortisation is 10% of EBITDA)





Interesting to look at share price movement for PNR. At one point it 5 to 6-bagged for buyers who were in it from 5c. I think we could see a similar story play out for PNR in a 2-4 year time frame ... particularly if we have a gold bull run.

EGA also has upside from exploration. Smart thing for them to do would be continue their exploration in parallel with construction. Be able to grow their resource/reserves and production capacity ready for when the mine has been paid off.