Ok, here's my attempt. I'd like to say that I've reviewed the...

Ok, here's my attempt. I'd like to say that I've reviewed the wikipedia entry of what "fair value" means in an attempt to do this properly.

I've come at this from a point of view of what should we be offered per share if there was some sort of takeover offer for PLV. I've tried to be pretty conservative in my assumptions below.

My assumptions:
1. The buyer would not see any return on a capital expenditure and monies paid for all shares for a period of 2 years. I assume a discounting rate of 12.5%p.a. (compounded yearly) over 2 years.
2. Having purchased all of the shares, they would still be locked into the deal with TimeOne, who (from memory) get to keep 20% of the profits.
3. PLV will make $70/t in profit (conservative) and produce 4.4mtpa of product. So total profits for the company is 0.8*70*4.4 = $308m p.a.
4. The number of Shares on issue is 227m (according to google finance) and we're issuing roughly another 56million to TimeOne, so there will be a total of 283 million shares on issue.

I've then roughly computed the enterprise value using a PE multiplier of 5 (conservative multiplier). So the enterprise value comes in as 5*308 = $1.54 billion.

But the buyer would have to pay $700m (conservative) in CAPEX and the money for the shares and wouldn't see a return for 2 years, so we have:

Value of all shares = EnterpriseValue/(1.125^2) - Capital Expenditure
Value of all shares = $1.54 billion/(1.125^2) - $700m
Value of all shares = $273 million
Value of 1 share = 97 cents.

It's a rough back of the envelope calculation, but I think it is in the ballpark of fair value.

Cheers,

Stats.