Awesome work Dgdgdm - this is a solid base case for the gold...

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Ubique13

910 Posts.

3383

16/02/21

10:37

Post #: 51024155
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Originally posted by dgdgdm ↑

Hi All,

Completed a quick NPV calc to estimate the intrinsic value of FFX shares based on Morila alone. My views only - please DYOR.

Outcome - it shows that if FFX can continue to execute, ie. prove up reserves and increase to 200 kOz/annum run rate as planned, we should conservatively be worth at least 5 bags+ ($1.32 SP+) based on MORILA ONLY.

This is analysis is considered conservative as it assumes;

Zero value for Goulamina ($A 1.2M post-tax NPV) in current SP

Zero value for CIL 4.5 MTPA plant and associated infrastructure (worth $US 350M to replicate)

Zero FCF generated this year (despite currently being cash-flow positive on tailings-only operations)

Fixed gold price at $US 1800/oz (no gold price upside)

Conservative long term average all-in costs of $US 850/oz (ie. 60% margin on cash costs provided from 09/02/21 ASX ann, this margin equates to >$60M USD/annum for G&A, exploration, sustaining & non-sustaining CAPEX which is very high for an established open pit gold mine).

Fixed $A 75M loan facility (equivalent to total forecast CAPEX from 09/02/21 ASX ann) @ 12% interest to cover other future capex/opportunities

No future increase in 4.5MTPA plant capacity (unused sag mill anyone?) which would increase 200kOz/annum run rate

No identification of other high grade zones or Morila 2.0 which would increase 200 kOz/annum run rate

Closure of mine after 3Moz gold produced (hence terminal value of 6) - excludes the huge Morila geological upside, 10+ years of upcoming drilling and tolling opportunities from nearby exploration projects.

No consideration of existing tax credits nor future depreciation & amortisation tax credits

No further gold mine acquisitions from >$A 125M/annum free cash flows

What's more scary is that with a current EV of $A 180M and forecasted 80% EBITDA of $A 195M if we can execute, which Alistair and the team will, our hypothetical forward EV/EBITDA would be at our current SP which is just not plausible. RSG in Mali for example currently have a EV/EBITDA of 4 at their current SP, which further emphasises there's at least 4-5 bags on the table here for FFX.

FFX is a billion dollar company in the making, even without Goulamina.

Disclaimer: my views only - please DYOR.
dgdgdm.

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Awesome work Dgdgdm - this is a solid base case for the gold project.

There should be plenty of meat in your conservative assumptions as well i.e. AIC should be even lower, exploration upside, high grade zones, LOM extensions etc
FFX Price at posting: 25.5¢ Sentiment: Buy Disclosure: Held
40 Upvote

0 Great analysis

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