I'm with you chartor, one needs to ask the questions and keep a keen eye on what could go wrong, as it often does. I have high hopes for MAK but I prefer to assume a lower production rate and a much lower RP price, so that future surprises are more likely to be on the upside than downside. I for one don't see current RP prices being maintained for too much longer.
For example, one could conservatively assume a production rate of 1 mtpa earning a nett margin of AUD50/tonne, and assume tax + royalties totalling 50% of that margin. If there are 150m shares on issue fully diluted and we apply a P/E of 6, we get about $1 a share. <-- very rough but you get the picture -- it makes 78c/share look fairly safe, with the potential for something much higher.
However we also have to assume (as someone else pointed out recently) that MAK are also at the whim of 3rd parties for developments that are necessary for the project to get up and going (transport hub, port redevelopment, etc). Delays are a normal part of this, and while MAK have been progressing well so far, delays related to 3rd parties could push the timetable out a bit to 2010 or later.
Anyway, I'm happy to sit tight.
AEV Price at posting:
78.0¢ Sentiment: LT Buy Disclosure: Held
