The problem with MW cheapprice is that is has the following assets to dial into it's vaulation;
Dikulushi Cutback - 90% of NPV = $104M
Kapulo Project - 90% of NPV = $157M
Total = $261M @ 143M shares = $1.82
Cash = $77M @ 143M shares = $0.54, the share price should therefore be at a minimum of $2.36, as this is the demonstrated value of MW assets,
Current SP = $1.15 - $0.54(cash) = $0.61, now this is the amount that the market is valuing the Dikulushi and Kapulo projects, ie. it gives the company a value of $87M, as opposed to the value derived from mining studies of $261M. When you consider that the Dikulushi cutback is half dug, then you could put $30M onto the derived value, pushing the basic target price to around $2.50, or about $350M. This is the figure you could sell these assets for, all things being equal.
In my experience if the market down rates the demonstrated value of a companies projects it does it for simple reasons, either is doubts the ability of the project to produce the goods or it doubts the ability for the company to produce the goods, or some combination of the two. MW is currently trading at 50% of it's demonstrated value and the DRC is not the wilderness it used to be therefore I would expect it is the company and it's management the market is not enamoured with. A fact that tends to support this veiw is that 12 mths ago the company listed on the TSX and raised $120M @ $2 a share. This raising accounts for 40% of the current shareholding and was a great success and is testament to the strength of the companies projects. Since listing we saw a bit of an initial drop with the ASX shareholders cashing in, but then a slow ong slide downwards, until at one point the company was valued at less than it's cash in bank, all this on tiny volumes showing noone knew or cared about MW, including the company management as they didn't need any cash from the market and obviously didn't concenr themselves with the shareholders value.
Now we see something change, two long standing directors get the flick, but save their jobs and their share options and associated shares, which they owe lots of money to the company for. One migh think what has happened to precipitate this, have the canadians, 40%, and Anvil, sorry Minmetals 14.5% and Pac Road 12.5%, a total of 2/3 of the register said to the managment now is the time to get it together, you are spending money like water and getting to the sharp end of the project development cycle, this is when the failings of management come to the for and cost big $$ and missed deadlines and very much erode shareholders value.
I would expect to see more changes happening over the next few months, I don't expect to hear about it as these guys simply hide everything they have under a bushel. But I suggest SH look closely within every communication from these guys as little nuggets of what is actually happening
are burried somewhere.
Originally I was targetting at $3 SP, now I would be stoked with $2, but I feel I might be kicking myself I missed out....
Cheers
Tubber
MWE
mawson west ltd
