Yes those Wilson assumptions look agressive in context of current prices.
I wonder what their assumptions are on FX in outer years and mine life?
I've got a simple NPV model set up for Hillgrove as I'm thinking of investing in HGO. When I plug in $4/lb copper price (and at AUD/USD parity) then I get a NPV of 34c a share (unrisked) which is short of the Wilson valuation. Presumbably this is due to either 1) they assume a lower AUD/USD rate in outer years which will benefit NPV valuation but can't see how that can logically happen if resource prices stay high. 2) they assume mine life based on resources as opposed to reserves. My NPV (I admit conservatively) assumes mine life based on existing reserves. Extending mine life by 2 years adds 8c to the NPV at $4/lb.
So if I'm optimistic about the $4/lb scenario, HGO is a screaming buy at current prices. On the downside, plugging in $2.50/lb gives me a NPV of just 17c (unrisked).
Anyone got a crystal ball on copper prices that they could lend me? :)
HGO Price at posting:
19.0¢ Sentiment: None Disclosure: Not Held
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