I don’t hold any ADN, but I do have a lot of MEP, which is undervalued by about 60% relative to ADN, assuming the full value of MEP’s 25% share can be realised for (long-suffering) shareholders. So I’m keen to understand the potential of ADN.
The Andromeda Pre-Feasibility Study announced 1 June 2020 had the following parameters:
- After-tax NPV8%: A$511m
- After-tax IRR: 135%;
- Maximum cash requirement: $28m
- Payback period: 15 months (from start of mining)
ADN Market cap (based on 2,248m shares & options):
- After feasibility announcement (5.9c close on 1 July): $134m = 26% of NPV8
- Current (24c close on 3 Dec): $540m = 106% of NPV8
- Peak (33.5c close on 23 Oct): $753m = 128% of NPV8
A quick review of other companies after-tax NPV and EV shows that typically NPV is 35 to 70% of EV - let's say 50% as an average. So at the current 24c price and the 50% ratio, Andromeda is pricing in a post-tax NPV of around $1.08bn from the Definitive Feasibility Study that we expect in the next six weeks or so.
Questions for punters:
- Is a 50% NPV:EV ratio reasonable for Andromeda?
- Is a post-tax NPV from the DFS of at least $1.08bn likely?
- Other thoughts on valuation?
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1.7¢ |
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Mkt cap ! $52.87M |
Open | High | Low | Value | Volume |
1.6¢ | 1.7¢ | 1.5¢ | $56.04K | 3.534M |
Buyers (Bids)
No. | Vol. | Price($) |
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3 | 67044 | 1.6¢ |
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Price($) | Vol. | No. |
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1.7¢ | 2945887 | 9 |
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No. | Vol. | Price($) |
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2 | 1000 | 0.016 |
38 | 10074219 | 0.015 |
12 | 2236049 | 0.014 |
7 | 2633923 | 0.013 |
6 | 1655833 | 0.012 |
Price($) | Vol. | No. |
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0.017 | 2945887 | 9 |
0.018 | 2862774 | 9 |
0.019 | 3659762 | 9 |
0.020 | 1653444 | 13 |
0.021 | 1350000 | 2 |
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