'Cheap but execution required. Assuming YML executes a 2mtpa trucking (CY10)- 5mtpa (CY11) we derive a valuation of A$1.81/sh (DCF10%). We consider a discount is appropriate given uncertainty over infrastructure however, on peer comparison YML looks cheap (EV:Resources A$1.92/t in-situ versus a sector average of A$13.25/t).'
This assessment was done when the share price was $1.04. The comparison with other juniors at that time suggested the share price could well be about $7, if there were parity. Now, from my understanding - Patersons believe that YML would be valued at about $18.10 per share once in production, based on their 10% discount value.
I may be calculating or interpreting things incorrectly, so would welcome other's thoughts.
One final note. Much has been made about Wayne Richards' link with BHP and how this can help with negotiations. What is overlooked is his role in Anaconda Nickel and the establishment of Murrin Murrin - which I think at the time also had Andrew Forrest's involvement. It would seem that Wayne Richards probably has had dealings with Mr FMG in the past, so who knows how that can benefit negotiations with FMG. Wayne's knowledge of Murrin Murrin will also be useful when considering the options for treating the Irwin Coglia nickel-cobalt - which is a highly valuable amount of nickel and cobalt.
YML Price at posting:
0.0¢ Sentiment: Buy Disclosure: Not Held
