An updated Arrowhead report is now available. See http://www.cougarenergy.com.au/pdf/COUGAR_ENERGY_ABIDreport_22Sep09.pdf
Couple of things are very pleasant to see. First whilst I put no particular value to a share price forecast (principally because dilution will occur as the power station is built) the range Market Capitalisations calculated by Arrowhead has increased from $85 to $172 million in the August report to $114 to $220 million in this one.
Second, and yet again, they DO NOT include any other value than Kingaroy. In my opinion this is a VERY VERY safe assumption, almost misleadingly safe.
Third, free cash flow in 2015 onwards is more than enough to pay some handsome dividends. (Maybe this is Len's target retirement date?) .
Analysis: Using the same discount rates as Arrowhead and counting forward econmoic vlaue, if one were to include a similar proportioned profit coming from the 341 million T in Wandoan as from Kingaroy, then valuation in Market Capitalisation must jump to around $410 to $807 million. (NB: it's not just 341/73 times value as there is discounting you need to allow for.
Either way, and assuming even a billion shares on issues, a four cent dividend and enormous capital growth means my holding in my Super find looks very good indeed.
Yeah, I know I'm an UCG and CXY (in particular) enthusiast, but when an analyst like Arrowhead does the number cruching, all we have to do is extrapolate a little to make sensible investment decisions.
I make no ramping comments, so if you've read this far ask yourself the following question:- How can CXY possibly be correctly priced at the moment?
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