Where the price ends up at the end August is very much in the hands of the Board and what they choose to announce dividend, capital structure and guidance wise with the FY23 accounts.
At a pragmatic level, I estimate EBITDA for FY23 at around $190m (I have excluded the depreciation on right on use assets in this calculation - otherwise EBITDA on my numbers would be $202m). Lots of debate on life of mine, so if we use a 5x EBITDA basis for valuation (roughly mirroring life of current stated reserves), then we get an Enterprise Valuation of $950m. Add the current cash and we are at an EV of $1,110m or about $0.93 per share. So on my figuring, this is a reasonable approximation of "fair value" before any other decisions of the Board around mine life, reserve extensions, new investments, etc, etc.
FY24 at this stage is showing an EBITDA of about $305m and so using the same methodology (I will stay with 5x multiple to represent the known 5 more years of mine life: FY24 to FYFY28 inclusive) - we end up with a valuation of about $1.45 (pre-tax).
But, as I say, what happens next it is very much dependent on what the Board decides to announce. One thing is certain, with such a high % of equity represented around the Board table, they are not in the business of simply mining out Koolan Island and ending up with a cash-box company or a company that has been hollowed out by paying out all its cash as dividends and its shares have a resultant nominal value. They are ultimately there to grow wealth and will be looking to make decisions for the next phase of MGX.
MGX Price at posting:
40.0¢ Sentiment: Buy Disclosure: Held
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