The reason they bought out Gecamines was to be able take 100% of the pie once they expanded to 50ktpa.
Management still believe they have taken out Gecamines on the cheap, but the market is saying otherwise.
Problem with today's announcement is more doubts has been offered as fuel to the sellers.
When will the balance sheet ratios be appropriate based on current market metrics? 2 years, 3 years, 5 years?????
The other nagging issue is the expansion cost was known prior to Gecamines buy out, so why do I suspect that the all of a sudden phase 2 has become more expensive since the buy out?
Based on current 25ktpa, 3.00/lb sell, 1.17/lb cost, AUD$ 0.84, royalty / admin / depreciation, I come up with EPS of approx 3.4 cents.
Assign PE of 4 = $0.14 (PE of 4 is based on execution risk)
Assign PE of 6 = $0.21
TGS Price at posting:
12.0¢ Sentiment: Hold Disclosure: Not Held
