I ran some numbers for berau using a discounted cash flow model based on the information provided on the SRK website. I used the current price of coal at us$52 per tonne, cost at $41/t and mine life of 9 years. Discount rate of 12%.
I tried to paste the workings but the excel sheet didn't display well!
Anyhow I came up with the present value for the project at about $390 million.
This didn't take into consideration the royalty payable to the land owner, couldn't find out what that would be. The discount rate may be a bit light also for doing business in Indonesia.
Anyway, it was quite fun to do the calculations - although probably not much use as we'll find out the result tomorrow - I think it will be more than 6 million though - good chance for management to prove they are worth what they are paid by negotiating a high settlement!
If we win the shootout I'll do some more accurate discounted cash flow projections for the iron and work out how to paste them to the forum - One thing is for sure - they will show the value of the company as being significantly more than 10c per share whatever discount rate you use!
Hoping for a good result tomorrow.
I ran some numbers for berau using a discounted cash flow model...
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