RHK value discussion
Assuming 200m shares on issue.
Scoping study NPV $368m excluding tax. That is $1.84/sh.
Assuming the PFS comes up with an NPV of about $750m. That is about $3.75/sh.
Scoping study post tax NPV $265m.
I expect PFS post tax NPV will about twice that in the scoping study. That’s about $530m or more. So about $2.65/sh. That does not include the remaining deposits all are not included in PFS resource. Including deposits not included in the Blacksmith Project.
These figures could be substantially greater if the Leichhardt Cape Preston Port gets to FID and if Red Hawk can haul to that port instead of Port Hedland. (Note that this option may take probably 3 or 4 years to become available - if at all). We know that RH has had meetings with Leichhardt. That opportunity may almost half our Road Haulage cost!
The real value is in TO price. Companies nearby with existing rail would have C1 cost of around US$20/t compared to RHK C1 cost of around US$50/t. That US$30/t margin could go direct to a TO company bottom line (less additional capex). Should they only mine 100mt that is a cool extra US$3b! Or about A$4.55b! At 200mt it is double at A$9+billion.
I can’t imagine any TO being accepted below A$1b. That’s $5+/sh. Could be substantially more. At this time there is no offer to consider.
My take is worst case scenario about $2.65/sh with the new post tax NPV in the coming PFS with possibly plenty of upside. The new post tax NPV divided by 200m SOI. I don’t known if they have all the company tax losses in the post tax NPV. The IO forecast is conservative @$89/t in the studies. The IO price is $20 higher a be moment. $20/t by 5mtpa = US$100m extra above studies!
Risk moving forward are outlined in the Rights Issue documentation. I believe the Robe Mesa deal was at about half the RM NPV (for a much smaller resource). Other deals have been very much higher!
Just my thoughts. I am not a financial advisor so do your own research as my calculations and assumptions may not be correct.
