Some will remember I posted this analysis during 2020 before the prospective Angel Nickel (ANI) acquisition.
The info I've taken from the presentation to Macquarie in May 2021. Of course, since production from ANI is not expected to commence until Q32022 this is a 'prospective' valuation. It also largely ignores the nickel matte aspect of production, which is I understand may close the payability ratio (from circa 85% - conservatively used in the analysis, to 1).
With a final instalment to pay off on ANI the shares on issue may increase further, which would reduce the valuation per share, but not majorly.
| Inputs |
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|
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| 1 |
| ER | 0.78 |
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| 2 |
| SP | $1.08 |
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| 3 |
| Nickel price (US/ton) | $18,300 |
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| 4 |
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| 5 |
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| 6 |
| Mine | New |
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| 7 | Hengjaya Nickel RKEF Project (HNI) | Ownership | 80% |
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| 8 | Ranger Nickel RKEF Project (RNI) | Ownership | 80% |
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| 9 | ANI Project (ANI) | Ownership | 80% |
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| 10 |
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|
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| 11 | Hengjaya Nickel RKEF Project (HNI) | Production (tonnes) | 17,280 |
|---|
| 12 | Ranger Nickel RKEF Project (RNI) | Production (tonnes) | 17,280 |
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| 13 | ANI Project (ANI) | Production (tonnes) | 36,000 |
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| 14 |
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| 15 |
| Nickel price ($US, tonne) | 18,300 |
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| 16 |
| Cash cost ($US, tonne) | 8,650 |
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| 17 |
| Payability | 85% |
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| 18 |
| EBITDA margin (/tonne) | 6,905 |
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| 19 |
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| 20 | Hengjaya Nickel RKEF Project (HNI) | EBITDA | 119,318,400 |
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| 21 | Ranger Nickel RKEF Project (RNI) | EBITDA | 119,318,400 |
|---|
| 22 | ANI Project (ANI) | EBITDA | 248,580,000 |
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| 23 |
| Total ($US) | 487,216,800 |
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| 24 |
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| 25 | Number of shares | NIC | 2,531,200,000 |
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| 26 | EBITDA/share ($ US) | NIC | 0.192 |
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| 27 | US:AUD |
| 1.82 |
|---|
| 28 | EBITDA/share ($ A) |
| 0.247 |
|---|
| 29 | Price | $1.08 |
|
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| 30 |
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| 31 | PE* (EBITDA) |
| 4.38 |
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| 32 | Estimated fair value PE |
| 10.00 |
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| 33 | Estimated fair value price |
| $2.47 |
|---|
Now, this analysis doesn't include corporate tax due to the concessionary period still having circa 5 years to run, say 4 years when we churn out the cash at double the volumes. Management will surely look to increase dividends, perhaps significantly, during this period. My person opinion is that the nickel price is also set to move over US$20,000 by the end of the year.
Good luck to all holders, especially those who have weathered this slow H1 of the year. I think the patience will be rewarded.
Have a good long weekend and as always DYOR.
(20min delay)