Hi - I'm new to this stock - I've bought in because MLX looks like good value and is diversified. Time will tell as to the quality of management (for me) but here's my valuation based on oversimplified metrics from the last quarterly. I estimate cash from operations i.e. before capex, interest etc as follows
Gold 65,000 ounces x 4 x margin of around $460 ( 1620 - 1160) approx $120 million
Tin 1,718 tonnes x 4 x margin of around 11,500 (USD 21750/.755 - $A17,344) approx $80 million
Combining tin and gold only cashflow should be about $200 million - at $1.41 and MC of $850 less cash of approx $200 that leaves and EV of around $650 or an EV/EBITA of 3.25.
If you look at the tin price below it has risen significantly throughout the year and MLX would be making much higher margins from even the last quarter. When you consider that they are talking about increasing production to 12,000 tonnes in 2018 the upside is significant. I don't think the market appreciate just how valuable Renison/Tin is to MLX. Tin is now almost $29k AUD up from $24.7k last qtr.
On top of that they are talking about adding another 70,000 ounces of gold at Fortnum from next March at an AISC of $1260 for an additional capex of $15 million. (page 7 of last quarterly) So there's upside in Gold as well, but that should be qualified by saying you wouldn't want gold below AUD$1500 as it may affect their higher cost operations below that point.
For me the big unknown are its copper operations - Cu is currently worth about $7,400 a tonne (2.55/.755 *2200)- last quarter they produced about 4,500 tonnes at an AISC of $6,348 so the margin is around $1,000 a tonne. From what I can gather that is only for two months so if they kept that run rate up (which I think has the potential to be much higher) that would be around 6 * 4,500 * 1000 or about $27 million a year. Since they've only recently taken over Nifty these figures probably need to solidified a bit more going forward - but clearly Nifty could be a cash cow if copper stays strong and/or costs come down and production goes up.
If you added copper to tin and gold then cashflow would be above $225 million (EV/EBITDA less than 3) with the potential to grow much more through organic growth alone which they can fund. i.e. if they get tin production up to 12,000 tonnes in 2018 and the margin stays around $11,500 per tonne that's almost $140 million from tin alone - another $60 million from what they're earning now - and another $20-25 million from gold (70,000 *300-400 per ounce from Fortnum)
These figures are very basic but other mid tier miners who spit out the kind of cash MLX can in the next few years can often trade on multiples of 7-12 not around 3 - so I intend on buying on dips from here on in provided management can deliver on the company's potential and operations stay on track.
Blackrock being on the register is a good sign as well - those guys know a bargin when they see one and could be eyeing off the tin.
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)