I have had time now to have a detailed look through the FY2017 Statements and used them as the basis for constructing my FY2018 Forecast. Some comments first on FY2017.
1. Commercial Production ("COP")was declared on 1/5/17. Production prior to that date was 40kts Spodumene so all associated Revenue & Production costs have been removed from P&L Account and capitalized into PPE.
2. Finance costs incurred prior to COP have been removed from P&L Account and capitalised. These will be amortised against future EBITDA.
3. The D&A charge = A$28m for FY2017. This is only for 8 months. (Since COP) so the charge for a FY2018 = A$41m.
4. Other Expense = A$24m. This is Corporate Overheads ("COH") and includes a non cash item = A$12m for Share Based Payment Expense. This is generally a one off expense so can be ignored in FY2018. COH can be set at A$12m pa
5. The cost associated with Canada & Argentina was A$0.541m in FY2017 so can be ignored in FY2018
6. The Tax Charge was an unusual technical adjustment and can be ignored. GXY has about A$74m (need to see FY2017 AR to get exact number) of Australian Tax losses to set off against future Australian PBT.
My take on the FY2017 Financial Statements and a FY2018 Forecast is as follows:
|
Column 1 |
Column 2 |
Column 3 |
Column 4 |
| 1 |
|
Units |
FY2017 Act |
FY2018 Fct |
| 2 |
Spodumene Sales |
dmt |
113,467 |
200,000 |
| 3 |
GXY Li2O Grade |
|
5.77% |
5.80% |
| 4 |
Market Price Li2O 6% |
US$/dmt FOB |
850 |
900 |
| 5 |
GXY Realised Price |
US$/dmt FOB |
817 |
870 |
| 6 |
AUDUSD |
|
0.75 |
0.80 |
| 7 |
Ci Cash Cost |
A$/dmt FOB |
495 |
410 |
| 8 |
Royalty |
|
6.42% |
6.42% |
| 9 |
Revenue |
A$m |
125 |
210 |
| 10 |
C1 Cash Cost FOB |
A$m |
56 |
82 |
| 11 |
Royalty |
A$m |
8 |
13 |
| 12 |
Corporate Overheads |
A$m |
12 |
12 |
| 13 |
Non Recurring Expenses/(Income) |
A$m |
9 |
|
| 14 |
EBITDA |
A$m |
40 |
103 |
| 15 |
Depreciation & Amortisation |
A$m |
28 |
41 |
| 16 |
EBIT |
A$m |
12 |
62 |
| 17 |
Interest |
A$m |
6 |
|
| 18 |
PBT |
A$m |
6 |
62 |
| 19 |
Tax |
A$m |
6 |
|
| 20 |
PAT |
A$m |
|
62 |
| 21 |
NOS (Shares + Options) |
m |
484 |
484 |
| 22 |
EPS |
A$ |
0.00 |
0.13 |
On a FY2018 Forecast of EPS = A$0.13 my maximum fair value ("MFV") for GXY = A$0.13 x 20 times (Generous!) = A$2.60. Current GXY SP = A$3.28 versus MFV = A$2.60 hence my current shorting strategy.
Nevertheless all my own stuff and please always DYOR
