Just reading through the past quarterlies of the company, and I like what I see. According to the September 2010 quarterly report, the NORNICO Project has a NPV of $75m, or 56c per share (fully diluted). That is, the entire cash flows from the project, aggregated and weighted for time, amount to more than the current share price.
What's interesting about this number is how the rise in the value of MLM's holding of MTE affects the discount rate. Typically, the discount rate used in calculating a NPV calculation reflects the individual risk of the project, in this case, the NORNICO Project. Higher project risk lowers the NPV. One of the risks presumably affecting the chosen discount rate is that of financing the Project; however, now that MTE is worth around $62m to MLM (based on today's price), around HALF the capex necessary to build NORNICO has become available. Capex for the project is $132m. (That is, the Project has a NPV of $75m after the capex expense).
Whether MLM use the value of the MTE shares as security for financing, or sell the shares, the risk involved in financing the Project has significantly fallen. This, in turn lowers the risk of the project, and will result in a higher NPV of the Project.
According to the last quarterly, there is also the Lucky Break Nickel Project commissioning late next year
So even before any NPV uplift for the NORNICO Project's "de-risking", or the value of the Lucky Break Nickel Project, or the value of the other listed investments, the company is significanly undervalued. with NORNICO valued at 56c/share, and MTE worth 46c/share, we're looking at a company with Projects and investments worth at least $1.02c/share
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