simple valuation, page-3

PART III

Sorry guys if you have gotten bored - i am not meaning to upramp LNC at all - i am just thinking out loud.

Price today - $1.765
Total shares on offer - lets round it up - 550 million (including options due to expire end of this year)

Company Valuation as of now $970 Million Dollars

Cash in the bank $500 million

Tax to be paid - not sure - but i dont think its a huge amount because a lot of past losses will be written off. I dont think any tax will be due really (THANK GOD we didnt get 1 billion dollars upfront).

So balance left over - 470 million dollars

companies which are cash strapped and having to let go of employees (like cougar energy) are valued at 68 million. Linc has already informed the market that they are light years ahead in technology - so if cougar could be valued at 68 million - LNC deserves a little more - lets say 100 million valuation for technology.

Now the shortfall is 370 million.

Royalties from Adani accrued over 20 years 2.5 Billion dollars. There is a HUGE marekt for corporate bonds .. safe corporate bonds. Adani's bonds are pretty safe .. if they werent Meryll Lynch wouldnt have taken up a huge stake in Adani.

Safe Bonds are expected to double in value every 6-8 years (much much better than Japanese Govt/US Govt/UK Govt Bonds). Most corporate bonds would give you 5%-8% per annum and i am assuming about 12.5% per annum. If we were to sell off the royalty as a bond today with a insurance attached - the minimum it could fetch would be $250 million. Doubled every 6 years would give the buyer 2 billion in 18 years.

The important part to note here is that all announcements have $2.5 Billion noted in royalties rather than $2 per tonne multiplied by number of tonnes mined. That tells me that there must be a minimum payout clause in the agreement to be roughly around $2.5 billion. Else it wouldnt have been used as a benchmark figure.

so a conservative royalty figure could be $250 million - this is HUGELY conservative.

Now the shortfall is $120 Million.

Emerald, Pentland and 339 other tentaments still intact.

The current price now seems a big joke.
A small correction was expected - noting ever moves in straight lines - but its not because the fundamentals have changed - but its because the bigger players with deeper pockets would do anything to shake off the small investors by scaring them - happens ALL the time. I know it - have traded/invested for 12+ years to see it happen.

I dont believe in averaging prices down - but do believe in buying whenever the market presents an opportunity - but ONLY if the fundamentals agree

in Linc's case they do - "its a good position to be in"

The above is not meant to be an investment advice. DYOR.