Whatever the true reason, selling pressure is just noise and the stock will converge to its fair value, whether the large shareholders sell 0 or 100 million shares. For me, the proper question to be asking is what is the fair value of the stock? Could approach this in a number of ways, but one back-of-the-napkin approach is as follows.
Start with a comparable stock, in this case Bannersmans, which has one uranium mine also in an African jurisdiction.
Then, use the 15 March share price as a reference point. Why 15 March? On 18 March, Bannermans announced an expanded scoping study, which complicates the comparison. 15 March seems like a cleaner reference point, with less moving parts to analyse. It's also a date by which point the uranium spot price had stabilised to somewhere in the 80s, in line with the relevant FEED studies.
On 15 March, the share price of $2.99 was a market cap of about AUD$450m. Looking at the most recent investor presentation before that date, the post-tax NPV assuming $80/lb was USD$435m.
Applying the same discount to NPV, fair value is about AUD$550m, or $0.70 per share. That ignores Haggan.
The true picture of course is more complicated. I can accept that Aura deserves a bigger discount to NPV. But even a 50% discount to NPV works out to be a share price in the 30s.
For the bears out there, what's the case that the true value of the stock should be where it is now, or lower?
AEE Price at posting:
13.3¢ Sentiment: None Disclosure: Held
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