Originally posted by Cashmeoutside
I think projections for Renison of 7,000tpa @ $9,000/t margin are reasonable.. that is $63m for 100%, $32m for MLX share.
EBITDA missing two large expenses - tax (30%) and underground development / sustaining capex - which is large for renison. Therefore the multiple for an EV/EBITDA should be low.
I always try to look at it from a cash point of view. If you assume operating cashflow of $32m less sust capex of $10m (MLX share) and tax of $7m (MLX share).. then ur only pocketing $15m in cash a year. Hard to value something which gives you $15m cash a year as worth $250m..
Thanks for your thoughts, particularly for pointing out the cost not included in EBITDA
I'm juust going off their reports, but referring to the 'All In Costs' figure of $18.3k, this gives a margin of about $6k. I understand this would take into account all ongoing and corporate costs, and also development costs (which arguably might not be included as 'sustaining' costs because they potentially lead to increased production).
I don't include tax when calculating EV/EBITDA ratio - only if using a P/E ratio which would probably justify maybe a 12-15x rather than 10x. Anyhow, I don't think MLX would pay any tax due to all the losses? Didn't seem to have any tax last year anyhow.
So, adopting a 7.5k production (this is the low end of guidance) MLX's 50% share would be $21.7 million. 10x this would be $217 million EV.
Still seems ok at current prices. Note their EV is $210 million due to their cash and share holdings (but admittedly that cash pile is reducing..)
I suppose you have to have some belief that management will still turn Nifty around to justify the share price. Market is ver strongly betting that there won't be any turnaround - if there isn't, and they don't find a buyer, then i suppose the price will fall further
(20min delay)