could this be the start of a take-over ?

Hello Guys,

Everybody knows that China is slowing down blah blah blah and that the commodity will get a hit.

But there could be a cotrarian scenario where the clamp down on debts could be that only companies which are making money at a relatively low costs becomes attractive.

PNA has about 20% holding of a chinese company and the recent unrelated purchase of RIO tinto copper operation could be a positive signal for companies like PNA. Remember that PNA has one of the most stable and consistent management and low cost environment and low capital expenditure. This would be the perfect time to make a takeover move for this company.


That is probably why we are seeing this control in the share price. The next thing we need to see is if there is an increase shareholding of the chinese company above 20% or another company goes in. The CEO did mention/hint in one of the article that PNA could be a good takeover company. The result of the report allows more certainty as a takeover price can partially be funded by the cashflow of the company. There is still a health margin for this project.

What is the price of take over ?

I would say based on an average price of $1.92 (a controlled collared price.. i believe!), we could be looking at between $2.40-$2.50.

This would value company at around $1.48 billion @$2.50.

The company based one the following projection of

65,000 tons copper @$3.11 (cost $2.12)
110,000 oz gold @$1300 (cost $757)


will make the following EBITDA (correct me if i am wrong)

Copper $141.7 million.
Gold $ 59.7 million

Total : $201.4 million


This will give the company a rough

P/E (@$2) ($1188 million /$201 million = 5.9)

P/E ($2.5) ($1485 million / $201 million = 7.4)

So basically, I believe that the company can easily be bought at $2.5 and financing should not be difficult as insfracture and cash flow can be easily determined.

If this analysis is based on a mine life of 10 years then, we can easily get $2 billion dollars worth of project based on this very simplistic valuation.


Tell me what you guys think.