Buy Buy Buy, page-2

Took a look at this one given the large SP drop. IMO it looks fully valued at the current SP but it’s highly levered to the POG given no hedges and it has resource upside.

It’s pretty easy to value too given it’s one asset. The Norseman DFS had a post tax NPV of $177m at an AUD gold price of $2200. The NPV goes to $335m at $2600 gold. Spot gold is closer to the lower bound but let’s use $2600 as the base case.

Given TUL owns 50% of the asset, their NPV is $167.5m. Add in 7.1% of PNR shares which are presently worth $19m at 19c PS and the NAV is $186.5 at 50c per CDI. I’m assuming all other cash gets spent on capex per the prospectus.

That gives me a 0.73x P/NAV which is ok but there are no hedges and the spot NPV is lower. There is also development risk. Unless gold goes higher or they announce major resource updates (reasonable probability on this) then I see this at low to mid 40s over the next month or so.

If gold goes lower then this will really get smashed.

I still don’t mind it as the leverage to gold is very high but there are better goldies out there atm imo.