Kanmantoo Copper mine ready to go ? For real ?, page-204

The spread sheet uses the correct Cu Hedge price of $12,500. Bit of bad luck hitting the 3 for $13 in the summary.

Be nice to trade on a decent valuation.

Keep in mind that the Earnings in a Price Earnings Ratio is the NPAT not the free cash flow.

Hgo won't have to pay tax for a couple of years but does have non operating Corporate Costs and a very small amount of Deprecation and Amortisation expense. Its fully funder with equity for the moment so no interest expense.

HGO will need the necessary mix of good reserves driving a 10+ year mine life and massive indicated resources to extend the mine life off into the never never. Those two ingredients seem to be the necessary driver for a miner to trade on a decent PER. Wth 50 to 80mt of high grade recently added to the exploration targets which has the potential to add 20 to 35 years to the mine life we might be in with a chance to trade at a PER instead of a few years free cash fl.ow.

Investment at the end of the day is all about Total Shareholder Return which is of course a mixture of passing dividend yield and SP growth.

" BHP Group shareholders received a total shareholder return of 15% last year. That's including the dividend. Having said that, the five-year TSR of 18% a year, is even better. "

We are in the early part of the journey and at todays share price can look forward to a massive dividend yield "

It won't be hard for HGO to deliver a much Higher TSR than BHP's five year 18% pa. N.B. 18% of 6c is only 1c a share.



BHP's recent acquisition OZL is interesting
OZL KEY Numbers:

* 2022 production 124 KT cu produced
* Resources 8,800 KT cu i.e. 71 years at 2022 production.
* 2022 earnings per share 62 cents/share.
* EBITDA $2.07 / share. So earnings is for them 30% of cash flow.
* take over price $28.25.
* Take over price based on a PER 45.6. That is aTTM return of 2.2% which falls well short of their 5 year performance of 18%.
* Price / EBITDA multiple 13.7
* Dividend yield 0.38%

Conclusion:

BHP seem to be factoring in the potential for an 8x jump in earnings from the tailwinds driving the copper price and increases in production.

HGO's free cash flow would jump 3.2x if the copper price hits US 15k /t. Production would also need to more than double to get to 8X. Its certainly in with a good chance given the massive increases in Exploration targets that are happening while they are "Just Scratching the Surface".