Profess.... i am not arrogant as much as I am a little annoyed...

Profess.... i am not arrogant as much as I am a little annoyed at the blatent and disrespectful rubbish that gets touted. I am serious though, i want to see these peoples figures as to how they arrive at a price that is lower than it is here and have a look at their assumptions. I am just a little over it, so apologies if you read it as arrogant. I would however like to put them on the spot, reflect in the next 6 months and see who's nearest to the pin.

Onshow.....

These are good questions you ask. It is difficult to value this one so as mentioned before I have tried to value it on a tonnage/plant scenario on a DCF (which is usually lower than a multiple). That way if it is 2 plants or 10 you can get a feel for it pretty quickly. In the models I used, I have CAPEX for the plant in 2011 and first earnings in 2012. I used a 15% discount rate for those plants that are not in deal mode - like Alcoa, and for the Aussie ops i use 10% for less risk. For margins and profitability i use the Aussie business metrics.

The future earnings whenever they fall can be reflected in the DCF which i like also, and it is good because it is an earnings story - so it makes sense to discount the earnings.

The only question the punters need to ask themselves is do they think that MHM will roll out plants or not. If they think yes - this is a buy - if they think no it is a sell.

If they think yes, - even if you place the earnings out 3 years from now you are comfortable taking a position here.

QUOTE - preliminary contract discussions in place with ALCOA USA. So what value do we place on this for instance? Forst question i ask - does this sound like they will build a plant? YES. ok so lets model a plant and say it comes out at $1.50. I think that this will eventuate but as some people have eluded to there is no contract signed and as such there is risk. Where to now? Discount the DCF of 1.50. If we assign a 33% chance that alcoa will build one plant I am happy to pay 50c for it now - if that makes sense.

What do you think?