Recommendation, page-391

I have had a few people ask me what my target is for this stock. That's a hard one to answer. The easiest answer is finding a target based on the project's NPV. From the scoping study, the after tax NPV at a MAP price of $643 is US$343.7mill or A$464mill. You could discount that by 15% for MNB's 85% share for $A395mill. The current mc is $60mill. Upside to the NPV is a factor of 6.6 or 85c per share to get to a $395mill mc. If you want to discount that by 50%, a 42c target seems reasonable for a company set to begin production in just over a year. It's worth keeping in mind that the $643 MAP price used for that after tax NPV is well below the recent MAP price of $780. That provides a nice buffer for the 42c (50% discounted) or 85c full NPV valuation.
That is not the end valuation though. Take a look at the EBITDA by year 7. US$89.9mill or A$121mill per year. A ten times multiple on that cashflow would value the project at $1.2bill or $1.02bill for MNB's share. That would be a $2.20 target although that would be in around seven years from now. So the near term 42-85c targets have plenty of upside in the years ahead. The production profile below shows the sp is likely to climb a long way over the next 7 years and there is still very strong upside to get to the near term targets.