BW,
I have been turning my mind to this conundrum for the past 6 months.
Brokers put out predictions based on a whole lot of declared parameters which turn out to be hype.
When I go through my files some 4 years later I find that whole tables of broker company valuations have fallen over.
The elephant in the room is a financing guarantee. China Rail will supply that.
IRD announcements are no help in valuation because while they state a net present value; we have no idea how many shares will be issued to arrive at project completion.
Valuation can be approached from several different ways.
One method is to find a recent sale between willing buyer / willing seller and RIO sale does that.
If I work it out for you, you will have no confidence in my result. Struggle a bit and develop confidence ; you will be no worse than a broker.
I will opine however that the value is a multiple of todays price which will be achieved when the investment button is pushed.
I am interested in any opinions that can calculate the uplift from in-ground valuation to production commencement when project cost is known ! Perhaps it is a multiple of 2 ! What return does an entrepreneur want ?
The only notation I know of is that IRD must pay Kingsgate ?? 150% of the inground value to move from 90% to 100% control of the Gawler iron ore rights.
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