Spot on.I've felt for a long time fair value is at the...

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the squash

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22/03/23

21:19

Post #: 66909320
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Originally posted by DDTRH: ↑

Very interesting.
Now we get some ideas of an aggressive takeover valuation of Ni resources vs shareholders' (shs) expectations.
Back of envelope calculations as follows...

Twiggy's bid at $1.40 ps for MCR is too low. MCR's cr in Dec 2022 was at $1.39 ps. Just an opportunistic move, unlikely to be successful.
At approx. 540M shares at $1.40, that's approx. $760M valuation for MCR by Twiggy.

The mid-point sp of (year high $2.60 + year low $1.10)/2 = $1.85. That would be the minimum expected by shs who don't use FA valuation.
The minimum valuation by non-FA/TA shs would be 540M x $1.85 = $999M, just shy of $1B.
The capital gain on just the cr would be $1.85/$1.39 = approx 33%. Not too bad a return for three months' holding.

Morningstar's valuation is $2.00ps, Comsec's brokers' consensus is $1.71ps, both as at today.
The average between these two valuations is again approx. $1.85ps.

Using $1B as the minimum benchmark to value MCR's NiS resources of 224kt: $1B / 224kt = $4,464 per ton NiS.
In the context of Ni currently being $22k-$23k per ton, that means the inground value of NiS is 20% Ni market price.
This seems reasonable at first impression.
But in this back of envelope calc, the following important factors haven't been taken into account:
Ni production of 8-10kt pa already in place.
Cashflow positive or negative.
Investment cost of plant and machinery.
Future exploration and drilling to uncover blue skies potential.

What does this mean for ARL?
As a start, the midpoint between the year high of $1.88 + year low of $0.46 is $1.67ps.
On approx. 173M SOI, the valuation is $289M. That's much too low!
This valuation approach is unacceptable for long term ARL shs.

Taking a different approach:
ARL's total Ni resource is approx. 5.8Mt.
The unadjusted inground value is 5.8M x $22k = $128B.
Risk adjustment is usually placed at 0.5%-1% of inground value, depending on geology and grade.
The risk adjusted inground value is therefore between $640M - $1.28B.
That places ARL sp at a minimum of $640M/173M = approx. $3.70ps.

Twiggy, Gina, BHP or Glencore can have all my ARL shares for not less than $4.00ps.

Expand

Spot on.

I've felt for a long time fair value is at the $500-1,000m MC range. Call it $5-10/share.

they can have half my 720,00 shares at 5, or all of them at 10.

is tempting to hold them all until dividends tho that would be fun
ARL Price at posting: 51.0¢ Sentiment: Buy Disclosure: Held
4 Upvote

2 Great analysis

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Last 71.0¢		Change 0.040(5.97%)		Mkt cap ! $141.6M

Open	High	Low	Value	Volume
68.0¢	71.0¢	67.0¢	$95.38K	138.9K

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No.	Vol.	Price($)
2	67055	68.5¢

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Price($)	Vol.	No.
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No.	Vol.	Price($)
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2	2757	0.675
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0.800	80000	2
0.830	9000	1

Last trade - 16.10pm 07/05/2024 (20 minute delay)


Last 68.0¢		Change 0.040 ( 0.00 %)
Open	High	Low	Volume
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Last updated 14.20pm 07/05/2024 ?

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Spot on.I've felt for a long time fair value is at the...

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