Upon further refinement and research last night, I have made some adjustments.
Here we have the production margins. This is calculated using the AIC (All In Cost) per tonne from the latest Quarterly with some rounding.
Here's where it gets interesting. I chose to use free cash flow yields over P/E or EV/EBITDA just because I want the final cash attributed to shareholders. This is calculated with reference to its Market Cap (450m), 907m shares outstanding.
I have estimated FCF by calculating operating cash flow. Here we will use the price of $30000/t at AUDUSD of 0.70.
Operating Cash Flow = [ Spot in AUD - AIC ] x Volume Produced = [ 42857 - 29500 ] * 9600 = 128.2m
We need to adjust this for the 50% stake -> 64.1m
Here's where I need to get a little bit dodgy. I'm going to make provisions for $20m of further expenses, just because unfortunately I'm not quite good enough to model and estimate individual expenses, so I'm just going to place possible depreciation expenses, other expenses, loss on investments or otherwise. I shall call this estimated free cash flow before tax (EFCFBT).
EFCFBT = 64.1 - 25 = 39.1m
Applying tax rate of 30%, we can find EFCF = 44.1 * 0.7 = 27.4m
This is equivalent to $0.0304 per share.
The big iron ore miners trade at about a 15% FCF yield, gold miners at about 5% from what I can see, and IGO and the likes seem to be estimated at 10% for next year. S&P500 oscillates around high 4.x% from what I can see over the last two years. Here we will use 10% FCF to market cap yield as it's a nice midpoint IMO.
We now find the implied share price by dividing EFCF per share by 10%.
i.e. 0.0304 / 0.1 = $0.30
This will form the basis for our sensitivity analysis table.
I know that this would mean that SP is theoretically over valued, but I'm sure that we can make this more accurate with some feedback.
I hope this clears some questions up, and keep in mind that I did make that $25m provision that does have a considerable effect on the valuation, but I thought it was required to keep this more realistic. Please do critique this figure or the process, as I only have to change a couple of numbers in the spreadsheet.
Again, all IMO DYOR.
(20min delay)