Some ball park calculations on Koongie Park. This is just a guess and I'm being conservative. When the PFS is released this sort of information should be in it.
The value of the resource is 1+ billion AUD. Assuming a 7 year mine life, that's revenue of 150 million AUD per year. Which could generate a profit of 30 to 50 million AUD per year. On a PE of 7 that gives a market capitalisation of 210 to 350 million AUD. Lets assume that a capital raising will occur prior to mine development and they issue another 200 million shares for a total of 700 million shares on issue. The share price would be in the 30 to 50 cent range.
This however doesn't take into account the Mandilla project. It also doesn't take into account that fact with so much cash coming in that AAR would be able to grow through acquisition or aggressive exploration. You'd expect a much higher price than 30 to 50 cent range.
The reality is that at this point in time AAR's share price does not reflect the value of Koongie Park. It seems to be valued only on the Mandilla project. It seems the market has doubts over Koongie Park yet the directors seem very confident about it happening in the near future.
The market has revalued SDL based on its iron ore project in Africa. Considering that project is much further away from development than Koognie Park perphaps the market will also start to add a valuation for Koognie Park into AAR's share price.
AAR Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
