First up welcome to the new posters. To finish the week at 60 cents was an excellent result. If PLV holds this (and it should) we have it setting up nicely to regularly appear in those companies testing and breaking 12 month highs...add news/developments to that and you have a recipe for a higher share price.
Some here have questioned the report (and rightfully so)from Intersuisse and its worth re the share price. The fact the valuation is $2.82 helps. Incidentally that is conservative btw. Ironically it more than doubled Investecs valuation assumptions only months before at $1.25.
Why is valuation conservative?
It assumes an iron ore price of US$ 83/t (v. $140/t spot), 25Mt of DSO at 2.5Mt/yr, plus 5.0Mt/yr of concentrate.
Project Finance could go as high as 80% of the project from the steel mill/s.
They calculate that PLV only needs to raise about $10m in equity. The report has included a further $25m raising ($$ they believe PLV will NOT require) to cover until cash flows from the DSO project.
Conclusions of report: In Intersuisse?s view, PLV is a BUY. Intersuisse?s derived valuation is $2.82 in the 'base case'. Intersuisse?s valuation is 'conservatively derived' and the investment decision is very robust for changes in assumptions.
Its a good report folks.
BUT......
This should not be mistaken for whats going on with PLV. Anyone can issue a report on a company.
The report fills in the gaps that the company stated to the ASX in their reply to the ASX.
The key here is PLV response to the ASX;
"The company has been running a process to potentially select an end user to assist in long term funding and off take arrangements for the Irvine Island iron ore project. There has been strong interest by several end users in Irvine Island and the selection process is...
SCHEDULED TO BE COMPLETED OVER THE COMING WEEK".
The report was released 30 September 2010.
What happens when PLV announces to the market that they have secured finance for part/major part of the project?
Intersuisse state that; At present, it seems likely that the DSO resource will be exploited first. This may be able to be done by the end of 2012. This will build up to a rate of 2.5Mt/tyr.
Folks, the early mover advantage here supplies the $$$ for further development of the project. Remember this is ALREADY a relatively low cost, in fact considerably low cost IO project. The company can get DSO underway from the Isthmus by barge to Cockatoo shiploader and to market and start the $$$ coming in to contribute to the overall costs of the project.
Remember folks that Cockatoo Island is owned by Cleveland Cliffs which owns 19.9% of PLV. It is expected to cease operations at the end of 2011 and PLV has the opportunity to take over the infrastructure to lower capital costs and reduce its environmental impact.
If you have already read the report...read it again. You will find any number of very conservative assumptions by this report.
What is clear is that PLV have said they expect to ship DSO CY 2012 from Isthmus area. If it achieves this its ahead of the game re its peers.
It isn't rated above them based on market cap.
The report states the Native title agreement is 'imminent'
We know by the Intersuisse report and the companys own ASX response last week that long term funding/off take agreements will (unless PLV determine to continue to build resource and value further)be concluded in a week.
As I stated earlier, I was very happy with a 60 cent close. I think it was a good result and one not too over the top....at this stage.
Lets see where we are with the above negotiations secured and finalised...and...lets not forget a resource that continues to grow and surprise on the upside.
I'd expect furher reports to steadily increase ratings and valuation.. And lets hope Investec and Austock review their earlier assumptions to include waht is, and will continue to be a larger resource, superior economic assumptions, and finance and native title agreement signed.
I also hope PLV will go directly to its shareholders if it requires additional short term capital and do an SPP before the share price goes much higher. The report assumed a 50 cent placement for $25 million.
Not enough discussion has been on the details of the report and 'why' it assumes the valuation.
The catalysts here for PLV in operational terms and share price appreciation imo are lining up very well.
Going forward i'd like to see some meaningful peer comparisons once PLV secures finance/Native title agreement.
We should see a shift and a continued appreciation for a stand out project to this point that has been misunderstood and not valued accordingly..
All imo of course.
PLV Price at posting:
54.0¢ Sentiment: None Disclosure: Held
