Hi kdwcThanks for your reply :)Just using one of your...

Hi kdwc

Thanks for your reply

Just using one of your examples.

OZ Minerals launched a A$444 million bid for Brazil focused copper miner Avanco Resources. The offer was also a 115% premium to the Avanco’s one-month volume weighted average price. The price of Copper was trading at around $3.00lbs USD in 2018.

It’s also important to note that Avanco reported gross profit of $17.24 million for FY17 (NPV would have been less).

In light of the above, I would have valued Avanco’s business (using FY17’s GP) at around A$170 million.

OZ Minerals clearly paid a premium by valuing the business at A$444 million or a 115% premium.

Interesting that the market capitalisation of the business (prior to T/O) was valued close to the $170 million figure I have used as fair value based on the last known GP figure.

The issue here (in my opinion) was that Avanco appeared to be trading higher than fair value. I can see how this would have appeared as price suppression at the time when it was only really coming back to fair value.

I understand that the board of Avanco overwhelmingly endorsed the deal highlighting the premium achieved when using the real numbers.

PAN is looking to generate over a billion dollars (mine life) or close to $100 million each year using the Nickel spot of $19,500 a tonne and its current market capitalisation is around A$500 million.

If OZL had paid A$444 million for a business that generated $17.24 GP for FY17 then what do you think PAN should be worth if generating GP of A$100 million per annum?

I would also put Friday’s sell off as buy the rumour and sell the fact (aka profit taking). PAN has been beautifully trending up since $0.07 so I do not agree with your statement that the share price keeps getting dumped as it rises - The market will re-rate PAN.

Marie