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2.7¢ goldoz limited

Great work, but I think your estimates for the first auction...

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wombat777

11,249 Posts.

29637

05/09/17

00:38

Post #: 26993238
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Originally posted by bdell ↑

Dyslexia again, bugger. Looking good now:

At current production of 200k crts pa:
Assume 75% of crts are HQ and sell for av $300: 150k x 300 = $45m
Assume 25% of crts are LQ and sell for av $60: 50k x 60 = $3m
Total revenue pa: 45 + 3 = $48m x 90% clearance rate = $43.2m
Ann says allow 50% for costs, leaves profit of $21.6m
Govt Royalties of 6% on Revenue $43.2m = $2.59m
$21.6 - $2.59 = $19.01m; less 35% Regius royalty = $12.36m
32% tax on $12.36m - $2m (deprecn of 10m cap outlay) = $3.315m
$12.36 – $3.315 = $9.05
$US9.05m x 1.25 = $AUD11.31m
Divide by number of shares: 566m existing + future dilution of possibly 200m ? = 766m
10.34m/766m = 1.48c Earnings per share
Calculated Share Price = EPS x PE; SP = 1.36 x 8 = 11.8c,
I am using a PE of 8 (half of GEMs)
So I am suggesting that if production continued at the present rate the SP could reasonably be expected over time to move towards 12c. I am certainly not guaranteeing this by any stretch.
This calc does not take into consideration the fact that production looks like trebling in 6 months and doubling that to 1m crts within 2 years. This leverage In my opinion will push the SP well past 12 cents.

At production of 600k crts pa (3 shifts in 6 months time):
Assume 75% of crts are HQ and sell for av $300: 450k x 300 = $135m
Assume 25% of crts are LQ and sell for av $60: 150k x 60 = $9m
Total revenue pa: 135 + 9 = $144m x 90% clearance rate = $129.6m
Ann says allow 50% for costs
Adjusting for benefit of scale I will use 45%, leaves profit of $71.28m
Govt Royalties of 6% on Revenue $129.6m = $7.77m
$71.28 - $7.77m = $63.51; less 35% Regius royalty = $41.28m
32% tax on $41.28m - $2m (deprecn of 10m cap outlay) = $12.57m
$41.28m - $12.57 = $28.71m
$US28.71m x 1.25 = $AUD35.89m
Divide by number of shares: 566m existing + future dilution of possibly 200m ? = 766m
35.89m/766m = 4.7c Earnings per share
Calculated Share Price = EPS x PE; SP = 4.7 x 12 = 56c,
(I am using a PE of 12)
I am suggesting that if production continues at this rate the SP could reasonably be expected over time to move towards 56c. I am certainly not guaranteeing by any stretch. This calc does not take into consideration the fact that production looks like growing 2 fold to approx 1m crts in 1 – 2 years

At production of 1,000k (1m) crts pa (3 shifts x 2 plants in 2 years time):
Assume 75% of crts are HQ and sell for av $300: 750k x 300 = $225m
Assume 25% of crts are LQ and sell for av $60: 250k x 60 = $15m
Total revenue pa: 225 + 15 = $240m x 90% clearance rate = $216m
Ann says allow 50% for costs
Adjusting for benefit of scale I will use 45%, leaves profit of $118.8m
Govt Royalties of 6% on Revenue $216m = $12.96m
$118.8 - $12.96m = $105.84, less 35% Regius royalty = $68.8m
32% tax on $68.8m - $2m (deprecn of 10m cap outlay) = $21.37m
$68.8m - $21.37 = $47.43m
$US47.43m x 1.25 = $AUD59.29m
Divide by number of shares: 566m existing + future dilution of possibly 200m ? = 766m
59.29m/766m = 7.74c Earnings per share
Calculated Share Price = EPS x PE; SP = 7.74 x 16 = $1.24,
(I am using a PE of 16)
I am suggesting that if production continues at this rate the SP could reasonably be expected over time to move towards $1.24. I am certainly not guaranteeing by any stretch.

At SP of $1.24 the MC would likely be approaching $1b. It's currently about $44m.

These projections I believe are conservative mainly because I have allowed for future dilution of 200m shares which hopefully will prove to be more than eventuates and the projections place no value what so ever on MUS’s graphite deposit.
Happy to be corrected of course.
IMO

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Great work, but I think your estimates for the first auction need further tweaking.

If you go through the earlier announcements (2016 in particular) you will see that earlier inventory appears lower quality from the photos. For the first 100,000 carats I have assumed 70% of the inventory is Commercial Quality and 30% is High Quality. Around July Mustang changed their focus to the 8245L license area which is yielding "almost exclusively" High Quality rubies. For this reason I am assuming 90% of the remaining 100,000 carats are High Quality and the rest (10%) are commercial grade.

For the second auction I then assume 90% are High Quality and 10% are commercial grade.

See this thread which builds on my analysis from a 2-3 weeks ago:

https://hotcopper.com.au/threads/in...te-for-auctions-1-and-2.3662847/#.Wa1lKZOg-qA

MUS Price at posting: 8.3¢ Sentiment: Buy Disclosure: Held
5 Upvote

0 Great analysis

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