DYOR. Speculative valuations are intended to provide a perspective on value and upside. They are not intended as financial advice. You should do your own careful research and make your own investment decisions.I bought on market via my newly-minted SMSF last week.
If they stick to schedule from PFS in summary I think 5 to 12x upside in steady-state production ( around mid-2023 ).
Looking at recent resource growth I am thinking up to 10% growth in NPV driven by growth in resource and an additional 5% improvement improvement in NPV driven by project optimisation between PFS and DFS. So 15% improvement in NPV. That's my conservative or base-case view. Anything beyond that will be a bonus. Further upside will come if gold price increases.
Using the figures from the PFS I've come up with a DCF-based or NPV-based and production-based estimates. These are the assumptions:
Project plan has mining and construction commencing Q3 based on the February presentation.
- 15% improvement in NPV between PFS and DFS and annual after-tax profit (based on reasoning above). This is intentionally conservative.
- 30% additional dilution over the course of the payback period to achieve cashflow.
They had $22.85M cash end of last quarter. I am thinking they will have $17M in bank at end of March Quarter.
Base case per share using a 15% uplift in after-tax NPV is $0.123 or up to $0.319 at AUD $3,000 gold price. If a buyout occurred it would probably occur somewhere between these levels but does very much depend on what the gold price does.
At steady-state or average production assuming P/E 15.0 (ASX average) and noting gold sector is flat at the moment I think $0.40( at AUD $2,100 gold) to $0.91 (at AUD $3,000 gold) in steady-state production (around May 2023).
Note on disclosure. Limited fire power in my SMSF as there are no contributions currently going into it. If they did a rights issue would consider contributing. Current plan to free carry in 12+ months.
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