Hi guys,
The outcome today illustrates the extent to which Mayoko was given away. It was painful to watch. I can only assume that mangagement felt CFE's cash situation (Marampa infrastructure payments and other costs) necessitated a cash injection at any cost. Personally, I would have prefered other options were explored but so be it.
CFE sold 75% of Mayoko for 47m.
The IPO raised 96m. CFE receives 47m and I expect AZI will have around 40m cash after costs.
To determine the EV of the project, simply subtract the cash of 40m from the MC (201.6) = 161.6m
The market has therefore valued 75% of Mayoko at 121.6m.
CFE sold it for 47m. About 75m gone in a flash.
To make matters worse, the project was sold before any value was added. A few short months down the track with bit of drilling and the JORC resource increasing, I expect the MC will be at least double.
MC of 400m tranlates into forgone revenue of around 270m, or around 90% of CFE's current MC. Think of the divvy that could have been ours. Oh well.
I posted a while ago that CFE, not being a one trick pony, can afford a fiasco with one of the deals and still come up trumps. I still beleive this to be the case, which is why I still rate CFE as a buy. Let's hope a Marampa deal provides the game changer. If TS realises anyhing north of 350m + 25%, I'll be stoked, given the other assets, cash and receivables.
Pity about this one but onwards and forwards.
I expect the recent interest is from those that were previously a little concerned about the cash situation coming on board.
Peter
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