Including options which are likely to be exercised, I calculate MHM will have 135 million shares on issue.
To fund construction of the new plant - $25 million $5 million current cash reserves $3 million from operating cash flow $1 million from government grant $5 million from option exercise $5 million through debt funding $6 million through capital raising @ $0.80 - 7.5 million new shares
Total shares on issue forecast to be 142.5 million shares
Forecasting Profit:
Geelong - EBITDA of $8.5 million No interest expense Depreciation estimate - $1.5 million (currently $500,000 - but some extra equipment has been installed) Therefore, EBIT = $7 mil, tax at 30%, NPAT = $4.9 million
USA Plant 1 - EBITDA of $25 million Interest expense - $500,000 Depreciation - $3,500,000 EBIT = $21 million, tax at 30%, NPAT = $14.7 million
Combined NPAT = $19.6 million
Rough 'Fair Value' calculation PE range 5 - 10 (depending on general investor sentiment)
Price range = $0.69 - $1.38
Note - This is my opinion only regarding an appropriate PE range, taking into account the business risk factors (unproven profitability etc.) and timeframe until full profitability (say 2 year till full commissioning, then 12 additional months until full capacity - 3 years).
MHM Price at posting:
85.5¢ Sentiment: None Disclosure: Not Held
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