outlook for zircon prices positive, page-12

Lets look at some figures used to assume a value for AZC, and the assumptions included, as per the Taylor report in April this year.

First, the financial summary. 2009 is projecting an EBITDA around $29 million and a final NPAT around $12.4 million.







Secondly, this is including a total amount of 41,790 tonnes of Zircon to be produced and shipped.







Finally, this includes a production rate expected at around 700 tph.







Now, according to their quarterly report (ending 31st March) production update, AZC was achieving a throughput rate of 600 tph. They highlight that throughput would increase from 600tph to 750 tph by the end of the June quarter (ie. now). So taking into account the above diagrams and their figures we can safely assume targets are met at 700 tph! The remaining 50 tph I will use to offsett the increase in the Aussie dollar even though they are substantially hedged against this.

41,790 tonnes of Zircon at an extra $100 tonne (ie. $900 tonne sales) would add $4.17 million to the NPAT not just the EBITDA. At $200 extra per tonne ($1000 tonne) that I am told the industry is receiving this relates to an extra $8.35 million to the NPAT not just the EBITDA, as presumably all costs would be fixed for the $800 tonne price schedule.

Final figures you would expect to come out at around NPAT $16.56 to $20.74 million in 2009 assuming no extra tax is due.

So we have a market cap of $45-50 million (fully diluted) at current prices with an extra $15 million in the bank from the raising. We have debt, but NPAT figures around $12-$20 million for even $50 million in debt is nothing, (disregarding the now healthy bank balance).

Taylor also calculate an NPV for AZC at 22c in April and then AZC gave away shares 3 months later at nearly half that rate, when on the verge of becoming cash flow positive as indicated by the full train load despatch on the 17th June.

It is sounding a little odd to me this latest set of events. Maybe some behind closed door insider meetings and back patting. All this at the expense of the average Joe Blow trader that supported these monkeys during the previous number of years with their hard earned when they put their hand out!!! Not including those mysterious 1,000,000 sell orders placed just days before the placement was announced and then just suddenly disappeared!!!

Trade safe!