I don’t hold any ADN, but I do have a lot of MEP, which is undervalued by about 60% relative to ADN, assuming the full value of MEP’s 25% share can be realised for (long-suffering) shareholders. So I’m keen to understand the potential of ADN.
The Andromeda Pre-Feasibility Study announced 1 June 2020 had the following parameters:
- After-tax NPV8%: A$511m
- After-tax IRR: 135%;
- Maximum cash requirement: $28m
- Payback period: 15 months (from start of mining)
ADN Market cap (based on 2,248m shares & options):
- After feasibility announcement (5.9c close on 1 July): $134m = 26% of NPV8
- Current (24c close on 3 Dec): $540m = 106% of NPV8
- Peak (33.5c close on 23 Oct): $753m = 128% of NPV8
A quick review of other companies after-tax NPV and EV shows that typically NPV is 35 to 70% of EV - let's say 50% as an average. So at the current 24c price and the 50% ratio, Andromeda is pricing in a post-tax NPV of around $1.08bn from the Definitive Feasibility Study that we expect in the next six weeks or so.
Questions for punters:
- Is a 50% NPV:EV ratio reasonable for Andromeda?
- Is a post-tax NPV from the DFS of at least $1.08bn likely?
- Other thoughts on valuation?
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0.8¢ |
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Mkt cap ! $27.42M |
Open | High | Low | Value | Volume |
0.8¢ | 0.9¢ | 0.8¢ | $84.87K | 10.60M |
Buyers (Bids)
No. | Vol. | Price($) |
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1 | 24406 | 0.8¢ |
Sellers (Offers)
Price($) | Vol. | No. |
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0.9¢ | 22072475 | 32 |
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No. | Vol. | Price($) |
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1 | 24406 | 0.008 |
61 | 29974136 | 0.007 |
29 | 10093156 | 0.006 |
17 | 14206199 | 0.005 |
5 | 7450000 | 0.004 |
Price($) | Vol. | No. |
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0.009 | 22072475 | 32 |
0.010 | 6137677 | 10 |
0.011 | 27266522 | 8 |
0.012 | 29515921 | 7 |
0.013 | 2310111 | 3 |
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