Have been doing a bit of research on the Lake Carey acquisition....

Have been doing a bit of research on the Lake Carey acquisition.

When MAT announced the acquisition, they were given a rap over the knuckles from the ASX for reporting, “a potential 40,000 oz gold p.a. production plan with strong cashflows over the first 2 years of mine life”.

However, the cat is out of the bag.

It’s obvious from the recent quarterly that Lake Carey is the near term focus for the company and that by the end of Q1 ’17, MAT will be in production.

With a current gold price of approximately AUD1,650/oz, I see no reason why MAT can’t be generating at least AUD250/oz in profit. At 40,000oz per annum that equates to AUD10m in profit or EPS of 7c.

Given that MAT has a JORC compliant 385K oz, this is almost 10 years of resource. And I’d be shocked if their exploration didn’t add greatly to this figure, with diamond drilling currently in progress and results not too far away.
Assuming my conservative assumptions are correct, I see absolutely no reason why MAT can’t be placed on a P/E of at least 7x, resulting in a share of 49c not including any value for MAT’s cash and other assets. A pretty fair case for a P/E of 10x or more could also be made, giving a share price of 70c+.

The acquisition of Lak Carey for $4.54/oz in the ground could prove to be a masterstroke by PP and a company maker for MAT. Consequently, current prices for MAT are a joke IMHO.