@Tradeahead Re-post August 5 2021 update on the value of NVOs business. Cashflow revisited.
Coming 12 months production target: 103.068oz/yr (it could be higher, but lets remain conservative and project linearly)
Revenue coming 12 months: 103.068 * AUD 2455 = 253,031,940.
Costs 12x 11M: 132,000,000 (Costs varies in a range from 10,5M to 11,5M based upon extraordinary items month to month)
BC free cash flow: 121,031,940.
Exploration budget: 12,000,000.
Free cash flow companywide: 109,031,940.
Then we have to look at the future return on investments. In addition to the Pilbara, NVO has a very significant investment portfolio relative to market cap, which generates significant profits. In the past year nearly a 1000% ROI was achieved, and this extraordinary number can hardly be repeated. How much will in particular NFG return in the coming 12 months? I would say 100%, but as an analyst I have to be conservative, so I will go with half of what I really expect, 50% here, to err on the side of caution.
149M @ 50% is 74,500,000.
Projected future 12 months free cash flow from investments and operations: 183,531,940.
If we assign a multiple of 16 to that number, NVO should be valued at 2,936,511,000, or 12,03 AUD per share. (I am using a multiple of 16 here, because while the Pilbara will last 50 years easily and deserves a 20 multiple, the investment portfolio will not be able to maintain a 50% ROI indefinately, which is therefore reflected in the combined multiple of 16 instead of 20).
12,03 AUD is in USD 8,89 USD.
NVO is going to have to rise 445% in order to be fairly valued based ON ONLY 2 of NVOs income generating assets.
On top of that ZERO value is given in the above for the operational long term success of these factors;
1. ZERO value is given for Talga Talga, with a 3 km. mineralized corridor, with the very best assays in the 30/g/t - 80g/t range. Can be processed at BC mill.
2. ZERO value given for De Grey style targets which may extend to NVOs grounds. These afforded De Grey a 1,5 billion valuation.
3. ZERO value given for Fosterville style targets at Malmsbury. A potential Fosterville hit could be worth up to 2 billion dollars in an exploration stage.
4. ZERO value is given for potential grade enhancements from Talga Talga high grade deposit, Contact Creek, Virgin Creek, Egina, Karratha.
5. ZERO value given to the wits 2.0 potential, and the option value that NVO represents with blue skies as far as the eye can see. The as of yet unseen is one of the more interesting parts here.
6. ZERO value is given to potentially revolutionary oresorting technology which may improve Pilbara extraction economics.
7. ZERO value is given to the fact, that as gold will explode in price in the coming years, so will the extraction economics improve dramatically across all of NVOs "gold fields", the known as well as the as of yet unknown.
8. ZERO value is given to the potential upside of a 12% ownership stake in Elementum 3D, with novel manufacturing technologies rapidly gaining favor with US military and NASA, and a high growth rate.
Meaning NVO is a win/win at current market prices. Reward vs. risk is EPIC!
Think of an option with a nearly unlimited upside, a time-unlimited option even, priced at a NEGATIVE PRICE of estimated risk per share (as the downside, if the upside did not materialize as expected on all counts, is more than covered by its asset value net of liabitities- the asset values are omitted here for brevity).
First technical target remains 7,62 USD (indicated by the reverse HSH pattern in NVOs stock, and a measured move from that, confirmed by @AUinvestors Fibonacci target, again confirmed by my several earlier cash flow based valuations). That would also form a cup-and-handle pattern, pointing again higher. Further, an 18 dollar+ target can be hypothesized based on Elliot Wave analysis, with at least now increasing certainty.
Disclaimer: This is not investment advice. DYODD. I am long NVO. 0 41 minutes ago