GREY:AFRIF - Post by User
Post by
LTGoldBullon Feb 26, 2013 10:16am
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Post# 21042388
£4 in H2 is perfectly reasonable SP target
£4 in H2 is perfectly reasonable SP target A Good discussion on future valuation on the AIM Boards. Cheers, Mark
Further to my post yesterday regarding SP levels in the future; the following post by Longsight on another site is interesting:
I just wrote this in an email & thought I'd bore the pants off you all by reproducing it here. Basically it sets out why I think £4 in H2 is perfectly reasonable SP target:
I was in AFF well before the split. In the year before the SP finally took off [as African Aura], the price moved or meandered between 45p & 80p. Finally it took off from about 60p & went almost vertically to above £3.
Similarly imo you can not judge the SP target now by its recent behaviour i.e. over the last 20 months.
£4 is not bullish at all. It merely wd reflect a price whereby the market considered AFF viable.
The SDL valuation at the 45c takeover price = 75c per contained tonne of 100% iron. AFF has currently approx 790m contained tonnes - which is set to grow from both Nkout & Ntem. 790m x 75c = US$592.5m + US$86m cash = £446m m cap / 105m shares = £4.25.(SDL Sundance ref: Hanlong/Sundance Takeover Deal set to close now 1 June)
If SDL completes then we are worth more than they are per tonne because they are valued as stranded i.e. their current status - yet we will be then valued on the basis of the rail line being built by them i.e. not stranded.
We also have 3 licences. Additionally, Ntem, Akon & Nkout are all considerably closer to the Coast = massively less freight opex. I don't believe SDL's opex numbers - they are imo far too low. Aussie doesn't seem to have the same disclosure of data like Canada TSX does. I think opex for SDL given the huge freight distance will be punitive. The quality of their ore products is not as good as that of Nkout either. Add in potential confirmation of zone 130 process [& a lot lot more zone 130 SAP in the next MRE5] + our rather funky JV partner [assuming consumation in Q2] & imo AFF is a lot lot more appealing than SDL. We even have the potential now of supply IO product direct into a POSCO mill at the port i.e. save US$25+ per tonne on sea freight + port fees.
That is what I honestly think. I reckon I will be proved right.
I wasn't surprised by POSCO - it's obvious why they want in - it's all in the presentation.
LdS said that AFF will become a US$bn Co. Read the presentation - I think they are now. Guy Pas the founder has already built 4 US$bn mining cos. Why won't AFF be no 5? Only reason imo wd be if we are taken over first.