In my view investors are underestimating the impact higher metal...

In my view investors are underestimating the impact higher metal prices have on ADT profitability.

In the DFS the after tax free cash flow was projected to be $US233m pa in the first 5 years of full production. The CEO commented a few times last year, when metal prices were 5% to 10% below assumed DFS prices, that ADT was going to be generating annual free cash flow of $US200m pa.

Metal prices are now 15% higher than assumed in the DFS with all metals above DFS assumptions (gold up 35% and Silver 37%).

The higher metal prices, assuming no change in costs, translate into after tax free cash flow 34% higher than the DFS and over $US300m or over $A450m in free cash flow per annum. Free cash flow is now about 50% higher than when the CEO made his $US200m cash flow comments last year.

ADT MC is less than 4 times cash flow - maybe about 3.5. ADT will pay off its debt in a very short time.

With a mine life of 18 years and likely to be extended, ADT is going to generate huge amounts of cash.

ADT SP looks so cheap assuming metal prices stay strong, they meet production guidance and costs are not significantly above DFS assumptions. Even if costs are a lot higher ADT is still very cheap.