You can still include risk (aka, unknowns) into your valuation calculations to work out the valuation of a business by using a few more metrics combined with a tiered model structure which then ultimately comes down to risk appetite.
With PON at $19,500 a tonne (currency approx $0.70AUD), PAN has proposed to generate over a billion dollars across the mine life. Approx $100 million gross or $63 million NPV per annum.
Depending on how you wish to value the business, you either get a market cap of $1 billion for gross or $630 million using NPV - Mining industry likes to use NPV.
PAN’s current market capitalisation = about $502 million. (Clearly undervalued in my opinion.
Now this is where it gets interesting. When you factor Nickel at $24k a tonne and the premiums WSA, IGO, MCR, NIC trade on then you really get an undervalued business.
Always know your numbers before you invest into any business because the valuation will always ultimately find its way back to it’s true value (Unless blatant fraud or manipulation is occurring).
PAN Price at posting:
24.5¢ Sentiment: Buy Disclosure: Held
