plv valuation by my calc

Here is my back of a stamp calculation for PLV. TS provided a presentation showing approx 1Mtpa being shipped from cockatoo per year for the next 7-8 years taking advantage of remnant stage 3 mining and spending an extra 15mil in capex for mining stage 4. Cockatoo is a 50/50 JV with the chinese at wise energy so 1/2 the profit is plutons. You can put your own assumptions in but at a selling price of A$103 per ton to be conservative, cost is $73 per ton ($51 + $14 shipping + $8 in royalties)leaving a net profit of $30 per ton which at 1Mtpa is 30mil profit of which 15mil is plutons(ignoring tax). This profit will last around 8years or so as there is 8Mt of ore there so that is profit is approx 100mil, present valued back to today. If the market believed TS was capable of delivering that the share price of the company would be about 35c(ie a market cap of approx 85mil being 100mil profit minus the 15mil stage 4 capex ). Over the last 12 months when its come to getting funds off plutons chinese partners they have always been late and/or underdelivered making TS miss his promises and lose credibility in the market. There are plenty who still doubt TS will get the 20mil enviromental bond for cockatoo off the chinese or even begin mining as they will delay/cancel etc.

That assigns no value to p14 of the presentation where TS states cockatoo's ore body may have a further 60-120Mt from underground mining (no one in australia has ever heard of underground mining for iron ore so probably thinks its pie in the sky BS) and it assigns no value for Irvine which has been extensively drilled and JORC resourced at 72Mt so far. Irvine will need a large capex in the hundreds of millions to make it happen and needs enviro approval so isnt yet a live project in the markets mind mainly due to Plutons lack of access to capital. So if cockatoo underground or irvine actually happens the share price would be many multiples of 35c as both are much much larger ore bodies than stage 3 and 4 of cockatoo.

To look at where pluton goes bust and where it makes lots if the long term iron ore price is $70 Pluton is out of business and and if its A$133 per ton then that doubles all the maths.

This entire valuation requires TS to actually deliver on what he has presented - something he has consistently missed in the past and definitely something the shareholders want changed.

Different views or comments?