So i'm wondering when JB is going to be considered within the market cap of AKE. If the current rediculous spod prices were maintained over the life of JB (doubt it), the income stream from the mine is worth around US$6B! My Present value was about 20% off the Bell Potter valuation for spod at $1200 in the long run. My uneducated guess is around $2,400 in the long run (so present value of around US$2.5B). Let me know your own valuations!
I ran calcs for present value of James Bay's income stream dependent on spod prices. Did NOT subtract CAPEX for mine construction from present value. spod prices are fixed in calculation, so you can kinda guess an average of 20 years and thats your Present value. Also assuming my workings are off by about 20%. Assumptions:
mine WILL be built (no discount because its a patch of rocky dirt and snow)
Open in 2-3 years
ramp up volume changes, 10% first operational year; 30% second operational year; 100% by third operational year
COGS indexed at 2.5% pa (based on est COGS of $330/tonne in last JB update)
additional costs for overheads (assumed 30% of COGS)
not sure what Canadian taxes are (I used 26.5%)
did PV year 3 and 4, then PV of 19 years of the income in year 5 (probs should of used 17, but cbf redoing each price point for the graph)
Required rate of return used for present value calcs = 10%
BB
AKE Price at posting:
$14.74 Sentiment: Hold Disclosure: Held
