Even withinthe current global climate, CUF continues to show is foresight and smarts toovercome these very transitory challenges (conflict, inflation, interest raterises, recession fears, supply crises, labour market shortages, cost of livingpressures etc.) to still prove they have a company with management that willput shareholders first even while the picking is thin. However, this begs thequestion, what would CUF look like to shareholders with a prosperous backdrop?
Now, I likebasic fundamentals and I will preface this with; I am not an accountant, nor amI a financial advisor. I look at raw and rounded figures, so these areobviously rules of thumb (ROT). I know I will lose a few of you after thosesentences, but please hold on.
What could thefuture of CUF could look like for shareholders WRT MC, Revenue, approx. NPATand dividend (it has been mentioned in a meeting I had as a future prospect)?
I have madea few assumptions from past experience, similar companies, CUF’s Annual Reportreleased today and a very recent meeting with CUF top brass at their HQ.
Enjoy, sendany spears my way.
CUF’s FutureEarning Potential
Assumptions:
-Allmonetary figures are in USD unless specified.
-AUD/USDexchange rate of 0.7.
-Using2 year average IO price for 62% - 165/t. (I know JWD is 64.7% and Yarram willbe about the same, so use that as upside potential).
-Onlyusing JWD and Yarram and in full production.
-Yarramownership at 100% (after discussion mentioned above, this is a realpossibility).
-JWDproduction of 500ktpa @ 60% ownership.
-Yarramproduction of 1mtpa.
-JWDC1 shipped costs of 100/t. (approx. from annual)
-YarramC1 shipped costs of 50/t. (discussions with mgmt.)
-1bnshares outstanding.
-Nofuture CR events.
JWD:
-Revenueof (162/t x 500ktpa) x 0.6 = 48.6m
-Grossprofit of 48.6m - ((100/t x 500ktpa) x 0.6) = 18.6m
-Minuscorporate costs and tax approx. = 8m NPAT
-Convertto AUD = 11.4m AUD
Yarram:
-Revenueof (162/t x 1mtpa) = 162m
-Grossprofit of 162m - (50/t x 1mtpa) = 112m
-Minuscorporate costs and tax approx. = 72m NPAT
-Convertto AUD = 103m AUD
ImportantFigures for shareholders:
Revenue Total= 301m AUD/yr
NPAT Total= 114.4m AUD/yr
Contextualizingthese figures vs MC and SP in AUD:
I have acouple of ROT I use to determine MC against revenue/earnings/sales etc. usingpeer company analysis. They included P/S ratio of approx. 2x, P/E ratio of approx.5x and a worst-case scenario of MC = Rev. These figures do not include ‘hype.’
If I lookat these figures and ROT, I come to these MC and SP numbers:
-Worst-caseMC=Rev
oMCof 301m
oSP of approx. 30c
-P/Sratio of 2x
oMCof 602m
oSP of approx. 60c
-P/Eratio of 5x
oMCof 572m
oSP of approx. 57c
Looking atthese numbers, the worst case if CUF is in full production and globalchallenges have subsided is 30c, best case is 60c.
Dividends:
Let’s lookat the idea of dividends; which were mentioned as a real possibility in the futureand from the numbers above, I can easily see why.
Looking atthe plethora companies within the ‘IO’sphere’ that are paying dividends, theyvary in ratios and what it is a ratio of. However, the ROT I use is 40% of annualearnings or approx. 18% of annual revenue.
CUF’snumbers in AUD:
-40%model, 114.4 x 0.4 = 45.76m = 4.5c/share
-18%model, 301 x 0.18 = 54.18m = 5.4c/share
The bestpart about the figures in this report, are that they don’t include the BryahBasin tenements; which are free-carried to production and of course, the sleepinggiant, CUF’s Tennant Creek Cu/Au mine. All of which are upsides that could pushthis Company even higher. We know from the past, Tony is one to turn a small,but profitable companies into 400m+ MC companies, and he has the management toback it up.
Happyinvesting. DYOR.
