As of today AGO could hedge the next years production at an average of $75/t. With the known strategy to forward hedge a large portion of production capacity I would assume that they will be hedging at least enough to secure $70/t for the 4Mt they will produce per quarter.
At $70/t AGO will set a floor of around $250m in profit for the financial year so with a PE less than 2 and the ability to lock in these prices there will be an inevitable revaluation by the market to a ratio that aligns with the broad market valuation strategies.
In the attached article they state that Australian companies are generally valued at a PE around 15 which would set the AGO MC at $3.75 billion, perhaps this is too high for a company that was just a year ago on the verge of collapse? However even at around 1/3 of the normal valuation we would command a MC of $1.25b, roughly 3 x current.
http://www.thebull.com.au/articles/a/440-what-is-the-price/earnings-ratio-of-the-overall-market.html
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