Its not at 6mil WMT yet, it will get there when they proceed with the stage 2 expansion. They do say they can do 4 mil WMT this year however, and considering their recent track record I believe them.
Without going into a detailed valuation model as I don't believe its necessary here, with a fairly low price per tonne of $52.71 at the peak of COVID last year (figure take from their June 2020 quarterly report), that's already over $210 million in revenue or almost 3x their current market cap. That to me is a little crazy as I haven't even adjusted for the current market for aluminum prices so you can expect this figure to be higher.
Obviously we are trading down at these low levels due to the considerable risks which emerged over the last year, but I believe they are quickly dissipating. For those who have not been following the stock, the primary were:
COVID (durrr) - forcing an early shutdown due to inability to secure new sales agreements in addition to lowering margins per tonne through suppressed demand and increased freight costs caused a painful blow to the share price.
China & AUS trade tensions - the possibility of not being able to re-open in April and export to Xinfa
Liquidity/Creditors coming due - MMI had two main credit facilities, they may not have been able to generate revenue for an uncertain amount of time and cash on hand (while fairly sizable) was too small and falling (due to extended shutdown periods) to cover these obligations.
What's changed?
Rising material (aluminum) prices - demand has spiked and price with it creating a very profitable environment
New sales contracts in final stages as mentioned in their recent reports in addition to some of these sales agreements being outside of China
Reopening of the Mine and shipping 2.3 mil WMT to origination client (Xinfa - $138 mil revenue)
Being conservative (in my opinion) and adding a 15% increase to COVID pricing you are looking at $240 mil in revenue for 2021 and $360 mil after stage 2 expansion in 2022. There is obviously more to valuation metrics than Price-to-sales, as this is very basic and simply an overview (ignores profit & debt), but looking at these figures, the ratio is fairly staggering. I do encourage, if you can be bothered, to do a further and more in-depth valuation.
So with revenues looking solid and
their uncertainty being mitigated, we are simply waiting for the announcement of sales agreements and recommencement of operations to see this stock turn a decent gain..... but whoever is here reading this probably doesn't need me to tell them that.
I've been using this lag in market price as a great opportunity to accumulate, however, this is all in my own opinion and I could end up being very wrong
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