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7.0¢ metaliko resources limited

Yes DFS will be a great help to value on current resources and...

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Sharetrader78

12,631 Posts.

1781

13/12/16

10:13

Post #: 21292160
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Originally posted by cdchi1 ↑

Well we'll hopefully get the feasibility thru in January some time, which I'm guessing will be very robust - my personal guess about AISC is around the $900AUD per oz mark (think it was $920 in scoping study), but lets say $950AUD conservatively.

So 65k oz at say $500 margin (also conservative since that's a AUD POG of $1,450, current is $1,550) gives them a annual pre tax profit of $32M.

I'd say the max they would have raise to get plant refurb (assuming no lease deal with Bullseye which i'll comment on later), is around $10-$15M. However whether they will do that all via equity, I have no idea, may well be debt or debt/equity as well.

I think that easily justifies a $100M market cap based on peer comparisons. And I just did a NPV calc using my calculator which coincidentally shows an NPV of $99M using the above values and:

- $0 debt
- 5 year minelife (scoping study only looked at the laterite area, I think its safe to say they will be going alot longer though)
- 7% discount factor
- 25% tax rate

If I put in current POG, NPV jumps to $120M. If I drop the AISC to $900 as well, NPV is $130M.

The above ignores any likely toll treatment deal, which could add around $7-12M per annum in profit (for four years) assuming any deal is struck and it is not a lease arrangement (imo it will not be anymore given the plant is now owned by the main resource owner as well).

Then theres the exploration potential which is just insane, but I don't account for that in NPVs as I'm just looking for worst case scenario.

Course my numbers could be all out of whack compared to the feasibility as I'm not sure what they will be looking at, ie just the lateritic resource defined at scoping study stage, extended lateritic resource, or combines lateritic and non lateritic resource. But I'm confident regardless, the annual profit will be around the pre tax $30M mark minimum.

The bigger picture of course is exploration potential and defining multi million ounces in the huge consolidated ground they have. But that will take time. I have a lot of patience.

Cdchi1

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Yes DFS will be a great help to value on current resources and plant value+ production profile ...I agree on a mid to longer term value EAR should be able to command a 100mill+ market-cap (my guess 2018-19)

micro-cap resource sector investors know a great DFS/est production AISC doesn't always equal fat profits .....as a ex PGI,NAV,RMS,AYN,CCU,CCU,BKO,PRU,OGC,CTO,BDG etc
I have seen some great est. AISC / DFS fall flat in reality ...

what EAR has in front of them in the short term....

-secure 90%+ MKO shares
-DFS
-Mining licence /enviro / native title clearance + bonds paid
-funding to refurb.. BZW
-Haul road construction
-Mining to remove 30m over burden ?

-then if all goes to plan start production Q3/17

(from recent EAR presentation)
Study assumes open-pit earthmoving conducted by contractors and toll treatment at a third party mill within 100km of the deposit...(so really need toll to keep AISC low ?? if it falls though could really hurt running costs)

then as we know BZW is a big plant 2mtpa+ which will need to be run at full capacity to reach best running costs ...EAR plan to feed 437,800 p.a .....leaving 1.5mtpa free ??

I really could see EAR trade down once MKO shareholders join the waiting while watch the likes of the Oil&Gas , base metals sector rebound ...the P.M could well take a back seat during 2017 ...

.....

Last edited by Sharetrader78: 13/12/16

MKO Price at posting: 7.0¢ Sentiment: Hold Disclosure: Not Held
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