Remember that they are spending capital to expand production and lower their cost base. So a good portion of the capex is productive.
So - depending on copper prices - the debt position will grow over the rest of 2016.
But look forward to 2017, and they will produce 32,500 tonnes at a AISC of approximately of US$1.50 per pound. So US$55m of site based cash flow at a spot copper price of $2.28 per pound. At $2.50 copper this would be US$71.5m and US$107m at $3.00 copper.
If you want to get bullish - say $3.00 copper prices - then they will be debt free by 2018 and in a position to easily pay a US$60m pa dividend. That would be about 4.7c a share. With those copper prices, they also have the option to double the plant size to 65,000 tpa and easily generate +US$200m pa of cash.
If you are bearish copper - then best to avoid TGS.
The great thing is that none of the upside is priced in.
What is the downside in the stock price? Could it halve - yes, under a scenario where copper prices are significantly lower and more equity needs to be raised (it isn't going to zero - why would the IFC and RFC allow this). What is the upside with improving copper prices? 3-5x. That seems like a good risk to reward ratio to me.
- Forums
- ASX - By Stock
- TGS
- Time Matters!
Time Matters!, page-4
-
- There are more pages in this discussion • 5 more messages in this thread...
You’re viewing a single post only. To view the entire thread just sign in or Join Now (FREE)
Featured News
Add TGS (ASX) to my watchlist
Currently unlisted public company.
The Watchlist
HAR
HARANGA RESOURCES LIMITED.
Peter Batten, MD
Peter Batten
MD
Previous Video
Next Video
SPONSORED BY The Market Online