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 <1 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.
(20min delay)