MOD (ASX) The future is bright (in my opinion)

Originally posted by joebop ↑

Hi John. Many options available of course so some variation of the above is plausible.

In relation to the $120m quoted above, the value of the mtr transaction, (ballpark) iirc 58m shares, was worth approx $26m when announced and $20m odd today, valuing the project at $80m, give or take.

The question then is, what does mod have to do to make up the $30-50m difference in valuation between the 2 deals? And then, the time frame involved to achieve that. Is the catalyst t3 underground, an outstanding dfs followed by permitting, a major spike in copper price, maybe new government incentives, tax break or all if the above?

Or can they justify that $120m tag sooner rather than later? Has tidying up the jv arrangement and upcoming dfs added that $50m already?

Que sera sera.

Expand

MTR picked up 57.8m MOD ‘shares’ via a combo of shares and free options (231m SOI current, 289m diluted) in exchange for their 30% of T3. So really 20% of MOD for their 30% of T3. If you want to ascribe a value such as $26m - which was done based on the VWAP of the SP at the time that’s you’re perogative but I would argue the SP is not reflective of ‘value’ - either when the deal was struck or now.

If you think the project is worth $80m for 100% - reflective of the SP, then I’d suggest you go and have a look back at the project, the assumptions used in the PFS, and what has eventuated since in terms of drilling/JORC, met work and the likes. If it doesn’t change I’d suggest you exit this stock as the SP is probably overvalued if T3 is worth just $80m.

In my opinion we’ll have a NPV come out of the DFS of well north of $400m using a 10% discount rate and $3/lb Cu price. The return on equity, particularly for a major that has a balance sheet that allows for large proportions of cheap debt, will be much much higher.

There’s no question a vast amount of funding options available - I keep leaning toward a streaming deal rather than giving away equity but there’s pros and cons of both and we still have a ways to go before finalisation of the DFS and hopefully in the meantime a continuation of strong Cu finds.