Yes, there were certainly many positives in the Annual Report.
I used it to do my own back of the envelope calculations for the Irvine reserves. Here's what I get:
Annual Report pg 6, first paragraph. Mine life of 21 years estimated to produce 72 million tonnes of high grade concentrate averaging 67.5% Fe.
Using the following assumptions:
- Long term price for 62% Fe delivered - $120/t (presently at $116 and averaging about $135 for the past 12 months)
- 72Mt of iron delivered over 21 years is about 3.5Mt per annum.
- FOB costs $51/t (various PLV Announcements)
- Royalties etc $10/t (7.5% as per latest Shareholder presentation)
- Delivery costs $10/t (lower than those used at the calculations at the start of this thread because of economies of scale delivering 3.5Mt vs 1Mt)
- Premium paid for 67.5% FE over the 62% rate $10/t
- Irvine Capex $500m
This gives an annual income of $206.5m ($120 + $10 - $51 - $10 - $10 = $59 x 3.5m) for the 21 years it takes to dig out and deliver the iron.
This gives a total income after costs of $3.84b over the 21 years. Taking away the capex of $500m and then discounting this in an NPV model at 5% gives a present value for the 72Mt of 67.5% Fe as $2.15B
Based on the issued capital (lets round it out to 300m shares) we get a value of $7.17 per share.
That's just for the present JORC Mineral Resource at Irvine. It does not count the Cockatoo numbers (already discussed throughout this thread, nor any potential for increased resources at either site.
In my mind, there is certainly a lot of room for the price to rise to better reflect that the company is now a producer with 50% of Cockatoo and 100% of Irvine.
Cheers
Badfish
PLV Price at posting:
13.5¢ Sentiment: Buy Disclosure: Held
