Valuation

Some will remember I posted this analysis during 2020 before the prospective Angel Nickel (ANI) acquisition.

The info I've taken from the presentation to Macquarie in May 2021. Of course, since production from ANI is not expected to commence until Q32022 this is a 'prospective' valuation. It also largely ignores the nickel matte aspect of production, which is I understand may close the payability ratio (from circa 85% - conservatively used in the analysis, to 1).

With a final instalment to pay off on ANI the shares on issue may increase further, which would reduce the valuation per share, but not majorly.

	Inputs
1		ER	0.78
2		SP	$1.08
3		Nickel price (US/ton)	$18,300
4
5
6		Mine	New
7	Hengjaya Nickel RKEF Project (HNI)	Ownership	80%
8	Ranger Nickel RKEF Project (RNI)	Ownership	80%
9	ANI Project (ANI)	Ownership	80%
10
11	Hengjaya Nickel RKEF Project (HNI)	Production (tonnes)	17,280
12	Ranger Nickel RKEF Project (RNI)	Production (tonnes)	17,280
13	ANI Project (ANI)	Production (tonnes)	36,000
14
15		Nickel price ($US, tonne)	18,300
16		Cash cost ($US, tonne)	8,650
17		Payability	85%
18		EBITDA margin (/tonne)	6,905
19
20	Hengjaya Nickel RKEF Project (HNI)	EBITDA	119,318,400
21	Ranger Nickel RKEF Project (RNI)	EBITDA	119,318,400
22	ANI Project (ANI)	EBITDA	248,580,000
23		Total ($US)	487,216,800
24
25	Number of shares	NIC	2,531,200,000
26	EBITDA/share ($ US)	NIC	0.192
27	US:AUD		1.82
28	EBITDA/share ($ A)		0.247
29	Price	$1.08
30
31	PE* (EBITDA)		4.38
32	Estimated fair value PE		10.00
33	Estimated fair value price		$2.47

Now, this analysis doesn't include corporate tax due to the concessionary period still having circa 5 years to run, say 4 years when we churn out the cash at double the volumes. Management will surely look to increase dividends, perhaps significantly, during this period. My person opinion is that the nickel price is also set to move over US$20,000 by the end of the year.

Good luck to all holders, especially those who have weathered this slow H1 of the year. I think the patience will be rewarded.

Have a good long weekend and as always DYOR.