I thought it useful to put out some numbers for comment. I have used the company full year guidance for production and sales less the numbers for the first half in calculating second half numbers.
Production 1H 187kt 2H 120kt Total 2021 307kt Mid point of guidance 290-320 kt Sales 1H 152kt 2H 170kt Total 2021 322kt Top of guidance 300-320 kt
Sales in 2H 120kt from production and 50kt from inventory
Price $600 (is this reasonable?) Revenue $102 million Cost of sales $53 million (same as 1H as company has flagged relocation of feed plant and lower grades) Gross profit $49 million Royalties $4.5 million (assumed 4.5%) Shipping $15 million (higher volume and assumed 50% higher prices) Corporate $2 million Exploration $2 million NPBT $25.5 million Tax $7.5 million NPAT $18 million
Net profit for full year ($18 m 2H plus $3m 1H) $21 million or 2.1 cps PE ratio 8.3
This compares with EPS of 2.1 in 2019 and 2.4 in 2020. Thus profits per share are broadly flat over recent years.
The big change for 2021 is the rise in shipping costs and the payment of tax reducing cash flow.
Next year there will be lower grades and the move to Atlas which will cut output, but they can run down the inventory remaining of 35kt to keep profits flat, depending on prices of course. This is a stable cash producing business, that can now pay franked dividends, rather than a growth business, until they announce new projects.
The big uncertainties in the above seem to me to be price (given recent rises) and the non-shipping mining costs in the second half.
I note there are miners selling on much lower PE than 8. AIS (with base metals and gold) would be one example on a forecast PE of 4.6 for FY 22 by Bell Potter.
IMA Price at posting:
17.5¢ Sentiment: Hold Disclosure: Held
