valuation must consider debtmost may not understand that Alara...

valuation must consider debt

most may not understand that Alara consolidated accounts show 100% of debt but the debt is held by the subsidiary:

The Company’s 51% owned joint-venture vehicle Al Hadeetha Resource LLC (AHRL) has a finance facility of OMR 24.8 million (AUD 94.22 million) (Facility) from Sohar International Bank (Sohar) for construction of mining and processing infrastructure at AHRL’s Wash-hi – Majaza copper-gold project. The Facility is secured over AHRL’s mining property and mine development assets and by corporate guarantees by stakeholders of AHRL, including an Alara wholly owned subsidiary. The interest rate for the Facility is 6.5% per annum for amounts drawn in OMR and 5.15% per annum for amounts drawn in USD, reviewable annually. The Facility has a term of 9 year and 9 months, including a moratorium period of 2 years and 9 months in which only interest is payable.



so, Valuation:

enterprise value is market cap plus debt minus cash.
EV is 50m market cap at 0.07 and 720m shares plus 40m aud debt (80m debt x0.51) plus 15m payables (30m also x0.51) minus 5m cash minus 20m owed to Alara by the JV.
EV equals 80m

NPV at 9500 per tonne copper is 140m USD x0.51 is 110m AUD

EV / NPV is about 0.73

projected EBITDA is 370m USD at 9500 per tonne cooper / 10 years x0.51 is 29m AUD
net income = ?, say 20m pa
EV/forward Earnings or forward PE is 80m enterprise value / 20m net income is 4.0