Worst case $100/t margin on 1mtpa is still $100M margin p.a.
That would be $60M odd after tax, royalties etc which on a low bear market PE of 6 still gives a sp target of $3.20 or so in 2 years. EPS would be 53c, dividend say half of that = 26c per share which is an 18% franked income return on the sp today.
And that is worst case barring a collapse in world RP prices/demand or a flu pandemic/nuclear war/global pole-shift which kills a few hundred million fertilizer consumers. That's something to watch.........
Bear market best case would be 3mtpa at $300/t margin, netting back to EPS of $4.75 and sp target of $28.50 at low PE6. Dividend at 50% say $2.39 per share which is 168% pa on current sp.
OK the middle ground might be 2mtpa to start at margin of $200/ton, EPS $2.06, sp target $12.40 at PE6. Dividend @ 50% of $1.03 = 73% return p.a on sp today. No-one really knows which if any of these scenarios will play out.
Given the upside is so apparent, even with a softening RP price, MAK seems a promising emerging producer (it's a lot further advanced than a common garden "spec"), so long as AD delivers smoothly and stops getting distracted with the other "maybe" projects.
I can think of many other worse places to put one's inflation & bearmarket-ravaged capital right now!!!
AEV Price at posting:
0.0¢ Sentiment: LT Buy Disclosure: Held
