Investors check out the following reports below & tell me what I am missing ?
Why is a company with a HUGE IRON ORE deposit so undervalued ?
SRK has confirmed negotiations with a group led by a major international mining company regarding the 100% sale of its two flagship iron ore projects for total consideration of US$650m (circa US$450m for SRK’s 68.15% interest).
Patersons report : Is US$450m enough? While we believe the potential sale appears reasonable and is worthy of board consideration, we recognise that:
1) the proposed valuation is well below our de-risked NPV of $6.23/share;
2) our upside case of $4.36/share implies an EV/Resource value of A$3.60/t (based on SRK’s 68.15% interest in 172Mt) which is considerably lower than the sector average of A$9.20/t;
3) if a positive outcome from iron ore price negotiations eventuates, we question whether the proposed price of US$650m would need to reflect this.
BBY report : value SRK at $5.85 per share.
Tollhurst report : Our base case assumptions produce a valuation of $4.26 pershare. However, if we assume equity is raised at our price target following BFS completion, our valuation increases to $7.30 per share.
All the reports that are available have SRK as a buy !
Might go & play a round of golf !
Feedback would be appreciated.
SRK Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
