Agree with other's comments that buying IBR is the logical trade at the moment. On the other hand, if there is completion risk, then buying TMR should lead to a massive rerating in the year ahead
1. They are unhedged 2. They say they should be producing circa 12-13,000t of copper in conc next year. 3. After by product credits they should have cash costs of +/- US$1.00/lb next year 4.) at "just" US$3/lb, this would suggest that gross margins for next year could be above US$50m. 5.) After depreciation, and tax (noting the large tax losses they have) this suggests that A$40m+ earnings next year are a possibility 6.) Even at half these levels (i.e. copper at US$2/lb in 2008) the earnings in TMR probably justify a re-rating to circa 8 x A$20m nett earnings =A$160m 7.) This would suggest a share price of approx 32c/share, plus something for Charters Towers and exploration upside
Looks - on this pretty conservative analysis - like a really good buy.
Then apply that cashflow to the on-balance sheet financing of the Armenian assets and this could be a 60c share by the end of 2008
Anyone disagree with this analysis?
TMR Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
