a valuation model fyi

I saw this and thought "Who is IMX?" and when I realised it was Goldstream, I realised I'd run a model on the Cairn Hill deposit a couple of months back.

The input assumptions are as per IMX's studies, which aren't yet a "bankable" feasibility, but are pretty close to it.

1.2Mtpa milling of ore grading 52% Fe (90% recovery to a con grading 71.4% Fe), 0.4% Cu (91% recovery to a concentrate of 17% Cu) and 0.1g/t Au (>90% recovery).

For the Fe stream, the 1.2Mtpa put through the mill produces 801,000t of con grading 71% Fe. Costs, assessed as basically similar to AXO's Balla Balla magnetite mine with a 4:1 strip, work out at (for an 800kt concentrate operation);
AUD$2.04/t dig x 800Kt = $3.42M
$1.03/t milling = $1.68M
$2.86/t admin and transport to the coast = $2.2M
$12/t freight to China = $9.6M
Operating cash cost are $9.38/t of concentrate
FOB costs @ China are $21.00/t - not bad at all.

For the copper circuit, I've assumed the digging is free (done with the Fe) and assessed a higher milling cost against the ore, though I've taken the 800Kt of Fe cons out of the milled cost for copper to represent the proposed flowsheet. Ie; 400Kt milled
90% recovery of the in-situ copper creates a 25,000tpa concentrate stream grading 17% Cu
$2.50/t milling = $2,1M
$2.00/t transport x 25Kt = $51,000
$12/t freight to China x 25kt = $380,000
US$180/t of concentrate smelting charge = $4.1M
Total costs for Cu = $275/t of concentrate or AUD$1,600/t Cu which is roughly US66c/lb cash cost - which is quite competitive.

Revenues are the key. For a US$80/t Fe price and a $3.06/lb Cu price near today's prices, revenues would be AUD$102M before costs and AUD$79M after costs (EBITDA).

On the longer term estimates of US$52/t Fe and US$2/lb Cu, revenues would be AUD$66M before costs and AUD$43M after costs (EBITDA). Therefore Cairn Hill is certainly quite a profitable operation, but this is a separate issue from whether or not the revenues justify a share price rise from here (67c).

I have also assumed another 45M shares will be sold to get up for capex - which is not yet well quantified - leaving a register with 206M shares.

With 206M shares on issue, assuming the low price scenario, EBITDA of $43M is treated normally, and a recurrent $3M exploration spend and $2M capex sustainment , the low price scenario infers $25M NPAT or a 12c nominal EPS, or a current 8.8 PER. Peersonally, I wouldn't buy on this model with these assumptions and forward price scenarios.

With 206M shares on issue, assuming the high price scenario, EBITDA of $79M and a recurrent $3M exploration spend and $2M capex sustainment, the low price scenario infers $50M NPAT or a 24c nominal EPS, or a current 4.5 PER.

On that basis, if you believe Fe prices will beat the price assumed by Snowdens and the company, and you believe copper will remain above US$2/lb, then there is good upside left in IMX.

You think I've forgotten about the Au, right? Well, I don't think it's payable. The 1.2Mt you mill contains 4,000 Oz of Au, ~90% which reports to the copper concentrate (3600 Oz). So you have 25Kt of copper concentrate containing 3600 ounces of Au for a concentrate head grade of 4.3g/t. Most smelters only pay gold if it is above a certain grade in the concentrate, and a 4.3g/t Au con is probably verging on unpayable.

So, until we get a firm contract for treatment and see what the Au credit really is, I'm discounting it. At best, it might be another $2M in revenue and hence doesn't really affect the EPS beyond 0.1c.

But, as always, DYOR and this is just my fallible maths and all IMHO. I'm not recommending you buy, sell or sit - make up your own mind.