A. I think they are very near to finalising the transaction. As naive as some of our directors appear to be I am sure that GS is pulling the strings. They would have known the effect of the announcement.
Q. Do purchasers just look at the 1p number then multiply this by some magical number and determine the value of the resource/reserve?
A. No. I would assume that they would apply a DCF model. In this model I would assume that they would be conservative with the furure gas prices however they would also try to be as realistic as they could. That is they would have a house view on the future gas price and apply accordingly. They then would apply a capex cost and the cost of extraction. If I was building this model I would be applying the futures gas prices, and compare against past prices. The discount I would apply would be in my discount rate.
Q. Is there any value placed on the total size of the resource.
A. IMO yes
In summary yes that announcement was a shocker and I believe the high end of the sp target price will certainly not be reached. However I still can get to a valuation of AUS $1.50 with little value placed on our "other assets".
My first question I think is most relevant and I believe that we will discover sooner rather than later the value of MAE.
Good luck
MAE Price at posting:
39.0¢ Sentiment: ST Buy Disclosure: Held
