where to from here, page-11

Hello Punters,

some interesting posts here so thought I would add my 10cents worth....I have some sympathy for Billroys view but for the fact that, at the end of the day the degree of dilution as a company grows is inversely proportional to the degree of support the stock gets in the market. If the share price is supported prior to a raising with news being well received then the sharehprice on the raising can be higher.

For TOE the difficult thing is, unlike almost every other uranium stock out there, they really do want to actually mine their deposit(s) in Australia. They have been conservative on pronouncements in terms of technical challenges and delivery dates and this has kept a lid on the share price - it has never been ramped, at least as far as i can tell.

I have noticed Toro gets sold down heavily whenever it makes a positive announcement. A classic example was the recent Lake Mackay results from SCOUT drilling - already they are looking at a possible ISR/ISL project on a multi kilometre scale not unlike Beverley/4mile - and what did they do? The share price went down!

They have just raised $61m and with the sharehprice at $0,15 the value of the Wiluna Uranium project has gone down as the EV has dropped from around $100m to $80m, even though it has been financially de-risked for at least 3 years!

So, down the track they have $160m to build the thing - but guess what? Unlike most other uranium projects out there a % of it hasnt been sold off to fund a feasiblity study (think Honeymoon, 4Mile, Lake Maitland, Bigryli) and is one of the few projects 100% owned by Aussi's. Toro is now in a good position to do a deal to construct the project. Using Lake Maitland as example, sell off 35% of Wiluna (8.5mlb) for A$10/lb ( amuch higher multiple than acheived on ASX) = $85m and they have their 65% share almost covered and by the time they do a deal they are likely to have a higher resource anyway and probably cover 100% of costs. So guess what? No more dilution.

The only situation where I see dilution possible is if they do a deal for scrip for additional resource (like the firestrike thing). Or perhaps a major deal with another company? (actually, if someone could convince OZl to part with their investment TOE are a great takeover target at the moment!)

btw Billroy, they are talking about producing 760tpa of uranium or about 1.7mlb. at long term rate of US$65/lb that is revenue of US$110m per year and operating costs are US$30/lb so their operating margin should be around US$60m. Need to subtract tax and royalties of course and pay for the capital. NPV is prob around the $100m-$200m mark, or about $0.10-$0.20/share if you want to directly quantify it as value against a share. To get to your benchmark A$100m pa I suspect you need a uranium price around the US$80/lb mark.

no recommendation here, as always dyor