So here's my very simple calculation for myself. Assuming production say in 2-3 years and total global annual production of Pd remain about 6-7mozs and let's say the market can absorb a further 10% increase per annum without affecting the price negatively, this would mean about 600kozs per annum for CHN. I'm discounting all others.
If CHN was to produce at 2mtpa @ 3g/t pge for 200kozs per annum in 2-3 years and increasing to 6mtpa throughput to produce 600kozs over another 2-4 years. I'm not taking into account Ni and other metals, just Pd pge equivalent.
If we take 30% as EBITDA and $3000 oz pge, that would be 3000 X 200000 X 0.3 = $180M per annum or multiple of 16X, give or take 2X for $3Bn mktcap.
Therefore, the total resource in the ground is not going to add much more value if there is more than 10X or 6mozs resource. So I feel Hartog is being priced in and will serve to confirm current valuation.
The Ni will add more value and if production reaches 600kozs in 6 years time, assuming same PEs, CHN might triple over 6 years but 600kozs is big ask?
One of the directors sold recently, so I've followed him and sold 50% into this rally. There's probably more upside but I'm happy to have sold half.
glta dyor aimo
CHN Price at posting:
$9.05 Sentiment: Hold Disclosure: Held
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