Due to the differing view as to production, sales value, inventory, Admin costs, COP and PE I thought I’d do some better analysis.
I've pulled together a SS (see screen shot at bottom of post) that calcs the basket price, and allows the user to override individual elements prices (as there is chatter about below and over basket price), the amount sold of each element (again chatter about some elements may go to inventory), the total production output, the COP, Admin Costs, and an expected PE rate, and the AU$ rate (as this is starting to have more impact).
Leaving aside contracts & regulatory chatter for one minute (we assume all is good) then this SS allows user to input their own numbers for the variables and perform ‘what if’ scenarios to estimate the future SP based on these variables. Each will have their own, valid, view of these variables.
This is a genuine attempt to bring some numbers to the various views out there. If there are any errors in the formulas then please advise and I’ll correct, probably same day (this is a very simple SS). I believe that all the major variables are used, but again if there are any others that users think should be there then let me know, and I’ll consider.
The really interesting numbers that impacted me were the EPS of current view, and the first ¼ 2013 Basket Prices – cells N20 and S20. Sort of shows the dramatic value difference when the basket prices change. Based on average ¼ 2013 the basket price would be $39.51 (according the LYC numbers) and 2011 would be $150. Try it out by ‘copy and paste’ or enter, the previous LYC numbers into the ‘Your Price’ column.
I added a tab with the assumptions and another with the options for LYC employees, as some are available within the next year at prices below or close to current SP. Like Sept 2014 with about 40M options at 66C.
If anyone would like a copy of the SS to play around with, then email me at [email protected] and please set up a dummy email account as I have no desire to see ‘real’ email accounts.
For the technically minded this Excel 2010 and there are no macros or VB code embedded in the SS, and if really concerned then you can always open in safe mode. In cross checking the numbers it appears the total gross sales is out by about $10m, based on sales of $600m, so marginal difference to end result. Happy to correct if anyone sees the logic error, maybe rounding.
Assumptions made (which in my view are the most buoyant, PE excepted); • Full design capacity is sold on contract or spot market at published Market Prices, or your own prices. Some may value less, others more. • 100% is sold - for anything less, enter in the '% sold' column. • Production will be 11 or 22 thousand Tones - 16.5 is allowed if Phase 2 starts half way during a year. • Production costs are controversial, so enter your own. Which may be different if you change the total production output. • Admin costs (a fixed value) - could be anything. Put in your best guess and consider amending if the total production value is changed. • N.B admin costs for 2012 were > 85M, including >10m for exec remuneration costs, and > $10M interest costs • PE ratio - put your value. I've used 7 for the full 22kt as this is the constraint. Can't produce more without major capital expenditure, thus they just can't sell more product. If the ore contained in Mt Weld, can’t be processed due to production constraints then the market may not value it too much – IMO. Disagree, no problem use your own PE ratio! • Lamp 1 &/or 2 are considered to be running all year, without unplanned stoppages. • Spare parts are available, on hand, for any production issues, or can be sourced and fitted within a few days, thus no consideration for processing failures. • No further regulatory issues, full approval and waste allowed to remain in Malaysia or sold. • Waste sold value is contained within Production costs per KG - adjust as necessary.
LYC Price at posting:
60.0¢ Sentiment: None Disclosure: Not Held
(20min delay)