Hi Klutch
Note: I have used my buy in price (10.5 cents) which gives a market cap of about 9.8m.
Thanks for your comments and thorough calculations. I agree with most of your calculations, but would query a couple of things:
EBITDA for the quarter is very hard to predict but your figure looks reasonable to me. I am not sure how the company manages their PAYG so some additional funds may have been withheld by the ATO. Including current development costs in helping to estimate EBITDA seems reasonable even if EBITDA is meant to be the depreciation and amortisation of past investments.
Proceeds from OTH will be slightly higher than 2.2m after tax in my estimate. Purchased for 1.98m and sold for 2.67m, the figure will be more like 2.4-2.5m.
Both of the above are only slightly different to your estimates and are not material in determining the value of REF. Where my value estimate differs greatly is how much 1800 Reverse is worth. I have not factored in a valuation of zero at the end of FY17. I hope it doesn’t run off that quickly and ultimately this factor will determine if the investment is successful or not. In my opinion it is quite possible some profits, albeit at lower levels, may continue for some years yet. I would be interested if you had any extra information on how you arrived at the figures you used for 1800 reverse – will certainly review my investment in light of new information.
All your figures for oz contacts seem fair (we are both just going off what management tells us).
Management has some fair chunks of their own wealth, hopefully by backing the “horse called self-interest” things will work out OK.
Thanks again for having a look at this Klutch. Would be grateful for any comments on point 3.
Andrew
REF Price at posting:
11.0¢ Sentiment: Buy Disclosure: Held
