Morgans 26c price target, page-4

Unfortunately the assumptions aren't clearly stated.

However applying some extrapolation, I've arrived at the following year by year estimates accounting for project / resource ramp-up:



See my alternative, peer-based estimate here:

https://hotcopper.com.au/threads/bat-valuations.3579543/page-20?post_id=30399042#.WmQ9RJP1WgQ

Taking the Morgans valuation and applying some extrapolation:

1. Unrisked estimates: Simple thing is to remove the risk weighting to arrive at unrisked share price, see the yellow column ( although this does not account for time-phased ramp-up ).
2. Montepuez: Share price is discounted 50% to account for development risk. Now assuming ramp-up of production and reduction in risk I can arrive at valuation for Montepuez in the $0.22 to $0.45 range, with the following assumptions:
   • ramp-up from 43.4ktpa in 2019 to 98.4 ktpa from 2022
   • adjusted risk weighting as project matures ( however I don't think we can completely eliminate risk due to sovereign risk associated with Mozambique ). Risk weightings unfortunately appear backwards, but that is the way Morgans and other research houses apply them.
3. Balama: The Balama project is about 24 months behind Montepuez. We can assume a similar but delayed ramp-up in production ( I've just taken the Montepuez figures allowing for the $0.05 already attributed at a higher column in the valuation ). So the estimate has Balama ramping up from 2021.
4. SPG: Now there are director incentives for a US-based SPG facility to be up and running by 2022 (see this post). I've taken the SPG figures from the earlier Morgans report (February 2017, see PDF below).

• Earlier (February 2017) Morgans report for SPG valuation.