Unjustifiably cheap. The project has a post-tax, unlevered NPV10 of US$895m, and an IRRof ~43%, both net of the Tanzanian government’s 16% stake. The NPV is ~7x the initialcapex requirement of US$115m. Despite these strong metrics, Black Rock’s marketcapitalisation is less than 2% of NPV. Assuming total initial capital required of US$140m,80:20 debt-to-equity funding, equity being issued at A$0.10 to A$0.15 per share, and a fairEV valuation, 12 months from now, of 30-50% of NPV, then Black Rock’s EV could beUS$269m to US$448m. This equates to a valuation of A$0.16-0.40 per share, ~4-11xthe current share price.
We are still a long way off 16 cents. Only place to go was north for the SP. As soon as it comes off the day high it surges again in the afternoon to close near or on highs. Might see another flag formation in coming days...might go sideways before resuming new trend. I'm happy to hear the contrary but for me it is difficult to see why there would be a large selling off now. Maybe back a cent or two on profit taking as some traders are now looking at 100% profit.
BKT Price at posting:
7.4¢ Sentiment: Buy Disclosure: Held
