Peer comparison calculations

1) Relevance of peer comparison

Peer comparison is an accepted form of FA everywhere and even by brokers and analysts. On my part I continue to do it with the highest respect to our peer. I on my part have never put down our peer to which I’m comparing and have yet to even comment on their thread. So I don’t see how the comparison can cause any animosity but just mutual respect. I’ve explained the relevance of peer comparison in detail in point 5 of my June overview some months back
http://hotcopper.com.au/threads/triton-year-end-overview.2542657/?post_id=15539086

2) SYR shares, market cap and diluted market cap

I’ll go straight to comparing the figures.

Google finance
Number of Shares as per Google finance – 199 million shares
Market cap as per google finance – AUD 630 million
http://www.google.com/finance?q=ASX:SYR&ei=zRgBVqmhNouJ0gTZ2a6wAQ

SYR presentation
May presentation
SYR shares as per May presentation – 165.2 million
SYR options on issue as per May presentation – 6.3 million
http://www.syrahresources.com.au/si...and Corporate Update Presentation 29May15.pdf

August presentation -
SYR shares as per Aug presentation – 165.2 million
SYR options on issue as per Aug presentation – 6.6 million
I can’t seem to find the August presentation on SYR site

Aug presentation mentions 65 million new shares in recent capital raising of AUD 211 million

I probably should be more aware of the exact figures but am too lazy to hunt for the same – So I’ll just take the google finance figure and assume options of around 6-7 million which means around 3-4% of the shares on issue.
So diluted market cap as per google finance figures is approx. AUD 630 million + 3% of 630 million = approx. 650 million

Cash from recent capital raising
Note that they just had a cap raising of AUD 211 million. So, the market considered SYR worth that much more i.e. 650 million + 211 million = AUD 861 million

Note that I am not referring to enterprise value here. For enterprise value, we would have to subtract and not add cash. This was a smart move by SYR to reduce the enterprise value and have a huge cash balance at the same time. It has come at a massive cost to shareholder value though, as shareholders have been crushed in terms of share price.
The reason I am adding it is that if the market feels that SYR is worth that much more, then I see no reason why the market should not assign a similar value to TON
So approx. AUD 861 million is the market cap I am considering for SYR as a target for TON to achieve. Note again that this is neither the diluted market cap nor the enterprise value, as mentioned above.

3) TON shares, market cap and diluted market cap

Google finance
Number of Shares as per Google finance – 377 million shares
Market cap as per google finance – AUD 98 million
http://www.google.com/finance?q=ASX:ton&ei=GhsBVrH1J8yo0gSl9bJo

Figures as per half year accounts –
http://www.tritonmineralsltd.com.au/wp-content/uploads/bsk-pdf-manager/654_1473148.PDF
Options – 23 million
Performance rights – 15 million
Roughly 38 million potential new shares or around 10% of shares on issue (377 million shares)
So diluted Market cap would be AUD 98 million + 10% of 98 million = 98 million + 10 million = AUD 108 million

So approx. AUD 108 million is the figure I am getting for TON

4) MNS shares, market cap and diluted market cap

Google finance
Number of Shares as per Google finance – 283 million shares
Market cap as per google finance – AUD 142 million
http://www.google.com/finance?q=ASX:MNS&ei=VCQBVqHpEdiH0gSznqGAAQ

Presentation -
MNS shares as per July presentation – 165.2 million
http://magnis.com.au/article.php?id=101
Number of Shares as per presentation – 314 million shares
Options – 209 million
So options are approx. 2/3^rd of the number of shares

To simplify matters, I’ll just take the Market cap of 142 million as per google finance, round it up to 150 million and add 2/3 rd of 150 million (for the options).

Final approx diluted market cap figure I get is AUD 250 million based on current market price of 42.5 cents

Market price some time back was almost 60 per share which would give approx. diluted market cap of 50% more - i.e. approx. 375 million. Many MNS shareholders believe this was achievable

5) Summary of figures

SYR – AUD 861 million - current share price AUD 2.66 per share
TON – AUD 108 million – current share price 25 cents per share
MNS – AUD 250 million – current share price 42.5 cents per share

To reach SYR value, TON share price can go up to approx. 8 times current TON price – ie. 25 cents *8 = AUD 2

To reach MSN value, TON share price can go up to approx. 2.5 times more even at current share price after MNS recently fell. - ie. 25 cents *2.5 = 60 cents

6) TON has achieved all that SYR has and more
Peer comparison was always one of the main basis of my TON fundamental analysis
I wasn’t entirely wrong –
My first analysis of TON was on March 7
Last close (March 6) of
TON – 15.5
SYR – 4.72

TON is still way ahead

SYR has never closed above 4.72 even once since my 1st analysis. It did touch 4.8 sometime back but then quickly fell immediately on same day. In fact the last time, SYR closed above 4.72 was 4.74 on September 12, 2014 or more than a year back. So peer comparison continues to be an important criterion for me, as it has worked for me in the past, and even for SYR shareholders who would have seen my analysis and acted accordingly.

TON has pretty much achieved most of what SYR has and more in so many respects.
My overview one month back is below
http://hotcopper.com.au/threads/ton-overview-aug-21.2577980/?post_id=15853778
Further points can be found in my recent comment history

7) Comparison to MNS

Peer comparison to SYR was easy due to the facts of being neighbours, similar grade, purity, flake size, etc. I’ve never done a peer comparison to MSN due to MNS’s speciality being jumbo flake and several other different criteria.

But, recently Ancuabe has come in the mix and as Proactive mentioned, Ancuabe graphite is believed to have the best flake size distribution in the world and the largest majority of jumbo and super jumbo graphite flakes.
http://hotcopper.com.au/threads/ann...d-at-ancuabe.2597805/page-90?post_id=16032061

As per @Pauldola calculation, Ancuabe could have 5 million tonnes of contained high grade graphite
http://hotcopper.com.au/threads/tri...in-mozambique.2598537/page-3?post_id=16027745
I don’t know the basis of Paul’s calculation but he is probably much better than me at this mining technical related stuff.

As per Magnis presentation, they have maiden JORC resource of 156 MT @5.2% TGC and over 8Mt of contained graphite
http://magnis.com.au/article.php?id=101
So, taking Paul’s figure we get Ancuabe’s contained graphite =5/8 of Magnis contained graphite

So Ancuabe potential diluted market cap = 5/8 of Magnis diluted market cap = 5/8 of 250 million = AUD 157 million
That would be approx. 50% more than TON’s current diluted market cap of final share price of approx. 37.5 cents...for Ancuabe alone

8) Conclusion

I’ve used many short cuts and approximate estimations as described above.

So TON which is very comparable to SYR can reach a share price of AUD 2 based on comparison to SYR (Nicanda Hill) and 60 cents based on comparison to MNS (for Nicanda Hill)
Comparing just ANcuabe to MNS would give share price of around 37.5 cents.

Just looking at above, we can see that even share price of AUD 2.5 to AUD 3 is not completely inconceivable for TON

Note that in above calculations, I have not even taken into consideration the benefits of vertical integration.

I just passed a comment on Sunday (check my comment history) on a gold stock and ended my comment by saying that on pure fundamentals, we are likely in the comment years to have one of the worst financial crises in history – one to be remembered for generations to come. Macro factors have always been the only main concern that I have, and I have always let TONners know that, to balance my bullish comments on TON. In the event of a severe crisis, however, it makes more sense that investors would sell of more overvalued companies and not grossly undervalued ones like TON.

All the above analysis is with the highest respect to SYR and MNS, and is definitely not intended to flame, bait, etc. in any way (My existing track record of not posting a single comment on those forums to maintain peace in the graphite forums speaks for itself). TONners - Please don't use this thread to disrespect SYR or MNS in any way - thanks in advance.

I’m just presenting figures as part of peer comparison which is a recognized form of FA by brokers and analysts too.

The purpose of the above was not to make an accurate calculation but just to get an approx idea. Does the value of AUD 2.5 to AUD 3 seem outrageous. Maybe.

But then the current share price of 25 cents is even more outrageous, and shows just how grossly undervalued we are in the graphite sector. And that is all that I wanted to illustrate, which I hope I have done