Our fair value estimate falls 18% to $1.60 a share following a reduction in recovery rate estimates and an increase in cash cost assumptions.
We expect improved ore management and higher head grades to lift recoveries to the mid 60’s in 2012. The de-sliming circuit should start in late 1Q12 aiding recoveries further.
A lack of free cash flow could prove problematic considering the relatively large debt pile.
Stronger base metals prices in 2012 should aid the 1Q12 result and may help lift sentiment towards the shares. The The US$46m loss expected for the full year is unreflective of long term earnings potential.
Free cash flow may remain negative in the short term but MBN is a long term story.
I know I know, who cares what brokers think.
MBN Price at posting:
$1.01 Sentiment: None Disclosure: Not Held
