that omf valuation

here's a bit of a back of an envelope on Lamboo prospects to put a little perspective around exactly what OMF are claiming.....

let's say:

target production rate = 50,000 tpa - which is on the optimistic side and not so easy to execute in current graphite market i.e marketting product/securing customers.

sale price = 1,500 AUD per tonne which is probably fair based on purity levels/flake size of drilling to date and current market prices attainable.

so that equates to Revenue of $75 mill per year.

If we apple some rudimentary valuation assumptions over that (no better or worse than OMF would do) we get:

75 mill X 40% (operating margin based on standard aussie iron ore miners, not many graaphite producers to base upon) = $30 mill EDITDA.

Then taking EDITDA of $30 mill and mutiplying by 4-5(once again using example of the FMGs and BCIs of the ASX) you get a rough estimate of a $135m MARKET CAP.

Compare that to the current LMB market cap of $86 mill and with about $111m of shares on issue last time I looked you quite quicky see that a share price of $1.20 is much much more reasonable than $3.50!!! or do they even mention something with a 7 handle in their report? LOL

And that $1.2 per share is looking ahead some 3 years? I know the market looks to the future and all but still it assumes a lot of things going right....

anyway that's just me sounding out a word of caution when it comes to broker reports, in my brief history of looking at them not one has ever even been close to the mark and they change so drastically at the drop of a hat!

DYOR, this is not professional advice, just my perspective on things!