p/e evaluation - update

Lets try the P/E Evaluation route on Mesa Minerals
Updated 21 May

Costs

Mesa JV costs are likely to be sub A$5/00 per unit, why?

OMH are targeting C1 costs of A3.50/unit at a larger scale But, Mesa JV has

+ Simple Mining
+ No dewater problems
+ Low Strip ratio
+ Simple crush and screen processing, no high power beneficiation or tailings
= Similar distance to port
= Similar remote location costs
= Similar product grade
- Marginally higher shipping costs Port Hedland vs Darwin to China

Although at 350,000 tpa fixed costs will hurt the Mesa JV on a per unit basis

Revenue

From OMH Annual report (April 29) Mn Sales are at U$8.35 / unit
US Exchange rate 0.82
So Revenue is A$10.18/unit

Earnings

Earnings per unit $10.18 - 5.00 = A$ 5.18/unit

Total Mn Units is therefore 350,000 tonnes x 38 % x 2% moisture = 13,034,000 Mn Units

So total earnings is A$ 67,516,120 or A$ 33,758,060 each for the JV Partners (Mesa Minerals and Auvex)

Mesa Minerals have 617,270,831 shares (21 May)

Or an EPS of 5.47 c/share

Now

OMH are trading at a P/E of 34.6
MIN are trading at a P/E of 18.8

So lets apply a P/E Ratio of 15 to Mesa Minerals

So the Mesa Minerals share price should be 15 x 5.47 = 82.05 c/share

Conclusions

1. The current offer by Mineral Resources is woefully inadequate and opportunistic
2. The current Board is selling us out when they should be getting on with the business of operating a mine and selling manganese
3. We need a change in management to realise real value for MAS shareholders.
4. Vote No to Mineral Resources offer and
5. Vote Yes to the Requisitioning Shareholder vote to Replace the Board on May 28.