PhillipCapital Research Update

http://www.havilah-resources.com.au/wp-content/uploads/2016/10/20161019_HAV_PCRR.pdf
Cheers for the link, chrisCarter.

Based on the information in the report, I come up with a share price of closer to $4 per share. Read on.

At a glance:

“HAV offers substantial value far beyond its current market capitalisation”. (p.1)

12 Month Price Target $1.10 [$225.2m] (p.2)

Portia, NPV @ 5%, $0.42ps

Kalkaroo, Transaction value, Risk Adj. 30%, $0.43ps

Nominal values attributed to:

North Portia $0.09ps
Benagerie Dome $0.05ps
Mutooroo $0.04ps
Maldorky $0.03ps
Exploration $0.04ps

DPS (¢) 2018E 5 (p.2)

Portia Gold Mine (p.12)

“2 g/t gold $86m, $0.42 (Used for the sum of the part (SOTP) valuation)
4 g/t gold $167m, $0.81”

Observation: SOTP valuation potentially + $0.39 ps at 4g/t gold.

North Portia (p.13)

“compared with Portia … [North Portia] could generate about two and a half times the revenue” (p.14)

Simply, by applying the Portia assumptions above, this equates to $1.05 ps or $2,025 ps.

PC has “valued North Portia at $19 million” (p.14) or $0.09cps.

Observation: SOTP valuation potentially + $0.96 to $1.935 ps applying the Portia assumptions above.

Kalkaroo (p.17)

“considerable scope to extend resources as the prospective sequence extends further” (p.20)

“High capital start-up:
NPV @ 10% A$508 million

Low capital start-up:
NPV @ 10% A$295 million” (p.23)

“For valuation purposes, selecting the low capital option and applying a 40% risk adjustment factor results in a value of $118 million for Kalkaroo.” (p.23)

Observation: This is $29.5m (or $0.14 ps) more than the amount used for the SOTP valuation.

Observation: Selecting the high capital option and applying a 40% risk adjustment factor results in a value of $203 million for Kalkaroo. This is $114.5m (or $0.54 ps) more than the amount used for the SOTP valuation.

Obviously, de-risking the project will increase the risk-weighting above 30% or 40% and therefore the valuation.

Also, the NPV rate of 10% is debatable in the current low interest rate environment.


If you’ve been keeping count, the (IMHO conservative) SOTP valuation could potentially be bumped up by $1.49 to $2.865 ps to $2.59 to $3.965 ps. Plus de-risking Kalkaroo plus Benagerie Dome plus Mutooroo plus Maldorky plus Exploration ++

Peer group comparison continues to tell me HAV is significantly undervalued and presents a low entry price to several high potential gold targets and an IOCG target near the Portia Gold Mine.

Feel free to add to my observations and/or check my calculations.

DYOR