Ann: TerraCom Annual General Meeting Presentation, page-41

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shaidar1974

656 Posts.

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04/12/23

10:32

Post #: 71251560
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Originally posted by mrposhman: ↑

Kangala ceased trading which is what has caused the drop in production.

NCC and NBC are the main 2 mines that are generating profit, but the jewel in the crown has always been Eloff, but it has taken sooooo long to get it to a point where they can develop it. Importantly its a cheap development as they still have the infrastructure at Kangala and Eloff is next door (and is a much bigger resource, around 528mt, so compared to anything else TER have, its clearly the biggest resource). Its potentially a key statement in the presentation that the CSA is almost approved, as that will trigger development. Back in the UNV days, they were forecasts an 8m toone mine (probably somewhere around 5-6m tonnes of saleable product) which is huge bearing in mind NBC and NCC contributed about the same last year, ie. there is a short term strategy to double production.

Maybe if there have been informal discussions around the sale, Eloff could be the driver of value for TER. If TER could prove that its likely but the new owner will need to pay for the capex, it could still have a significant impact on valuation on any sale process.

I mean look at EBITDA in 2023 of around $128.4m (somewhere around $64m net to TER, for around 6.3m tonnes sold. Using valuation metrics of 3-4 times EBITDA and value would be somewhere around $180,- $240m but Eloff could result in buying a near term increase to double that. Sure it would be discounted if it wasn't developed, but even at 1.5 times forward EBITDA, could add around $100m to the sales proceeds. Thats significant enough to hold any sale process over until a CSA has been approved and they can get to FID.

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Thanks for that, again, i don't follow the RSA operations closely.

I don't think a prospective buyer would be using 2023 EBTIDA as a base to determine a purchase price (if you were to buy the mine, would you use this financial information?), considering the coal price during the 1H of 2023 was crazy.

The last two quarters (Q4 2023 and Q1 2024 - most recent available information) they have made an EBTIDA of $11.0m and $14.7m respectively - 6 month period $25.7m. So annualise that $51.4m. TER share 50% = $25.7 million. Using valuation metrics of 3-4 times EBITDA, value would be around $80 to $103 million.

Agree if Eloff is going to be developed, maybe they are better off holding off until that is approved.

Last edited by shaidar1974: 04/12/23

TER Price at posting: 34.0¢ Sentiment: Hold Disclosure: Held
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0 Great analysis

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