Thanks for pointing out. I miscalculated the gold annual output and used quarter instead. This calculation is based on the 80% of RIO.
Besides the C1 cost, we also need to look at the longevity LOM (life of Mine) of this project. When I saw that they have this "new techonology" for underground, that seems to say... this is non-conventional type so we would expect a higher cost of production.
I have come up with a value of $1.995 based on the acquisition of the chinese group.
I would assume that PNA will have a substantially lower cost so it could increase the premium to the share (asset value is based on the yield it produces).
If ever there is a raid on the share, I would be looking at a price between $2.40-$2.60, valuing the company between $1.5-$1.6 billion.
Here is the rework of the analysis
NORTHPARKES MINES
They have been operating for the whole year of 2012 and till first half of 2013.
Their average production per quarter is 11.4 tons of copper.
annual production is as 45.8 tons of copper @1.0% grade.
They also produce Gold.
Gold = 15,200 oz (0.53%)$1300
Annual Gold output = 60,100oz
Annual sales (copper): 45800X($3.09/lb X2.2x1000) = $311 million
Annual sales (Gold): 60,100X($1350/oz) = $81.1 million
Total sales: $392.1 million.
Price Sold: $830 million
Price/Sales ratio: 2.1
Now, we look into our good trusty PNA and do a Price/Sales Ratio
TOTAL SALES:
COPPER 65,000 x(3.09x2.2X1000) = $441. million Gold 110,000 oz X ($1350/oz) = $148.5 million
total sales = $589.5 million
If we assume a Price/Sale Ratio of 2.1
Then, a theoretical current market value is calculated as follow:
PRICE/SALES = PS RATIO
PRICE = $589 MILLION x 2.1 = $1236.9 MILLION
THEORETICAL TAKEOVER VALUE: $1236.9 MILLION/620 MILLION SHARES = $1.995 PER SHARE.
Now, we got a price closer to $1.995.
This calculation is based on the 80% share holding of RIO. Sorry I made a mistake on miscalculating the annual output of gold.
PNA Price at posting:
$1.98 Sentiment: ST Buy Disclosure: Held
