TAW isn't a STT for me (this time around), but rather a LTI - my timeframe is at least 3-5 years, potentially longer (5-10). Once I completed my thorough due diligence, I bought in with conviction and am adding to my position.
What I consider to be a low-ball takeover offer, and what SP I will be happy at, are two different/ unrelated issues. Being 'happy' at 5c doesn't mean I want to/will sell at this SP.
Yes, I will be happy when the SP is 5c (a 7+ bagger is nothing to scoff at), but, no, I wouldn't be happy if we were taken out at this price. Why?
1,475,250,387 x 0.05c = $73.7 million market cap.
5% of the IGV of our 61.9Mt maiden resource =
61,900,000 x $48 = $2,971,200,000
$2,791,200,000 x 0.05 = $148,560,000
So, if you accept 5% IGV as a fair valuation for our CURRENT mineral resource (in terms of a sale/ takeover price), then yes, 5c would be at least half what I would consider to be a fair price for what we have. In other words, anything less than 10c (or the figure above: $148.5m) would fit my definition of a low-ball takeover offer.
BUT, in light of recent announcements, we all know that the 61.9Mt maiden resource is only going to grow. Therefore, one could argue that even a TO offer of 10c would be seriously undervaluing the true potential of this resource.
To wit:
Let's assume they can build the resource by a multiple of 5.
61.9Mt x 5 = 309.5Mt
309.5Mt x $48 = $14.85 billion.
$14.85 billion x 0.05 = $742,800,000 (or approx. 50c)
Of course, pie in the sky stuff, especially at this stage of the commodities cycle. IGVs count for nothing right now (but LT - they may well do so). Saying that, the calculations above assume a POIO = $48 per tonne.
Anyway, anything around 10c will allow me to retire early to an island somewhere, whereas anything closer to 50c will enable me to buy an island. Gotta dream, mate.
TAW Price at posting:
0.6¢ Sentiment: Buy Disclosure: Held
