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Rubbery fundamentals, page-2

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orionwoo

5,989 Posts.

255

03/02/17

13:12

Post #: 22350290
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Originally posted by moorookamick ↑

The fundamentals of the MUS mine is abit more difficult to ascertain than, say, gold mining.
The overburden is primarily clay/gravel (not rock) and the processing plant is more of a simple screening job
with a twist; more akin to river sand/gravel quarrying than your normal open pit gold mining.

The data given to us so far is sketchy and we will have to wait a quarter or two to make a reasonable
guesstimate at margins , AISC etc. But I guess that's why the share price is 6c & not 60c because of
the need to speculate.

That said, I'll speculate (all IMO of course)
Knowns:
Daily throughput................1000 t/p/d
Plant capacity.....................300 t/p/h (7200 t//p/d)
Grade:.................................0.11--5.0 carats
Value/carat.........................$25 --$40K
Ore seam average of....................... 1.8 meters
Strip ratio say.................................. 4:1 (5 ton mined for one ton of ore)
(see most recent presentation)

Unknowns:
This type of quarry operation normally costs $20/ton or...$80/ton ore on the ROM pad.
Now this one of the bits of "guesstimate" where "guess" is stretched:-

-Say average grade is 2.55 carats/ton (see range above)
-Say value/carat is $100/carat ( 80% shrapnel, 15% premium grade & 5% plumpers)
At current throughput that would be:
-Revenue..................................................................$93 mil
-cash mining costs...................................................$7.3 mil
-Plant, admin, royalties, marketing , tax etc...........$9.0 mil (minimal tax over the next few yrs due to dev. costs)
Misc.........................................................................$2 mil (Its a third world country after all!)
NPAT.......................................................................$74.7 mil
# of shares (diluted) ...............................................626 mil
-EPS........................................................................11.8c
-nominal p/e say......................................................5
SP guesstimate in 12 months.................................59c

Could I emphasise that this is a very elastic guesstimate and traders/investors should do their own
research and/or seek professional advice before buying MUS shares.

Once we get the results of JORC drilling we will have a clearer notion of LOM, grade etc and production
figures will indicate plant recovery rate etc. With a bit of luck, good management and favourable ruby
markets, this has the potential of a Disallowed, IMO.

mm

Expand

Nice summary buddy, thanks for sharing. I see it's feasible.

Only thing is the throughput rate will need another 500t when the 3rd shift is added, so your valuation can even stretch up a bit further. Mine model is close to yours so I was shocked when I initially made the calculation & wondering there has to be something wrong as those numbers are just too big

MUS Price at posting: 5.8¢ Sentiment: Buy Disclosure: Held
2 Upvote

0 Great analysis

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