valuation of perkoa and mumbwa abt 4 bucks

Wait a sec , re CAPEX - look at the CAPEX of Sandfire (SFR) or of the asx lised African Producers od copper such as Dynasty Metals (DML) or even Tiger Resources (TGR).....the CAPEX figures for SFRs high grade rather large deposit was WHAT?, 550-600mill from memory . Rex Minerals have a huge resource from memory and the CAPEX was like 1bill-1.2bill for their huge find.

YOU ARE OBVIOUSLY ASSUMING THAT BTR HAVE BILLIONS OF TONNES OF METAL IN THE GROUND??!

I reckon given that its in AFRICA, and close to infrastructure ,CAPEX will be much lesser than that of RXMs 1.2bill and they have a huge resource bigger than SFRs but lower grade (all from memory)

We wont even need 1bill unless its in the gazzilions of tonnes as youre suggesting, which is a bit far fetched....the instos wldve been all over it ala SIR!

The shares worth about $3-$4 bucks incl future dilution from my figures....Perkoa worth about 50c....making about say 15mill a year on a margin of 20cents per pound of zinc @ 90000tonnes (but we get 40% of the profits on that 90kt of zinc production at margin of 20c per pound; NOte costs are 1500/t which translates to 70c per pound of zinc; zinc price atm is 85-90cents, So were making a margin atm of 15-20c per pound). 15mill pre tax cash flow divided by 150mill shares = EPS of 10 cents a share for perkoa pre tax n depreciation

In this kind of market perkoa will garner PE multiple 5, making it worth 50c ; In an ordinary market thats recovering in metals itll garner a PE of say 7-8, making it worth 70-80cents; In a bull metals market itll get PE 10 making perkoa worth $1.00

Right now metals prices for zinc weak so i reckon its worth 50cents atm (note this is pre TAXATION!); If we include TAX its worth about 40c say.

But sentiment will get better, if zinc prices average $1.00, well make a margin of 30c per pound. 90000Tonnes * 2200 (2200 pounds in 1tonne) * AUD/USD of 1 parity * 40% (we own 40% of the 90kt production) = 32mill pre tax n deoreciation cash flow

32mill/150mill shares = circa 20cents a share; PE 5 = $1; PE 7 = $1.40, etc, PE 10 u get $2.00 on 20cps cash flow (pre tax of course; include tax and its about 25% less ie $1.50 on PE 10)

So you can see that if zinc prices increase from 90 to $1.00, our profit goes from 15mill to 30mill

So if the zinc price is $1.00; OUR MARGIN is 30cents; and we make 32mill pre tax. Post tax say 25% less = 25mill

25mill post tax/ 150mill shares = 16cents a share; give PE 7 in a decent market and we get $1.00 per share for the zinc from perkoa alone.

NOw the copper from Mumbwa isnt even included here

With Dilution in the future, lets say we have to raise 300mill and we get the rest of the project finance from glencore or debt markets....its plausible that if the scoping study and DFS etc give the project a green light, wed be in the $3 territoy.

Assume an extra 100mill shares issued at circa $3

Wed now have a share capital base of 250mill, say with options etc , wed have 300mill issued capital

NOw say Mumbwa is in production:

Say 100,000 tonnes a year at a TOTAL COST of $1.50; Say copper long term is $3.50 ; thats a MARGIN of $2 per tonne

NOw 100,000 tonnes * 2200 (to convert to pounds) * 1 parity for currency * 70% (say we give up 30% to glencore for their financing) = 154mill in profit pre tax.

NOw combining perkoa with circa 25mill profit and mumbwa with 155mill = TOTAL PROFIT of $180mill; take tax say 20% in africa = circa $145mill

145mill - depreciation say 10mill = 135mill

*** NOw say 135-140mill profit divided by 300mill issued capital = 47cps per share post tax n depreciation

PE 10 (due to enormity of project) and you get $4.70

iF you take $150mill EBITDA cash flow per share basis valuation: 150/300 = 50 cent per share ; PE 10 you get $5 valuation

PE 8 u get $4


*** Note of course thats all based on ASSUMPTION that we DOUBLE our share capital to 300mill and give 30% to glencore