RE:RE:SlewThey did $46mm Ebtida in 4Q21 with Ni at $9.00. So far this Q, Ni is at ~$10.50. Each $1.00 increase in the price of Ni adds $35mm in Net Earnings. Bridging Net Eearnings to Ebitda for the 1Q22, we need to add back about $7.5mm in Interest Expense, $8mm in D+A and not much in Income Tax to get to about $50mm on top of the $46mm they did in 4Q21 to total $100mm Ebitda for 1Q22. And maybe deduct some opex inflation that might total $10mm. Soe we get to $90mm Ebitda for 1Q22. If Ni holds anywhere near this $9-11 level, S will produce $250mm Ebitda for 2022. EV/Ebitda = 400mm shares x $.57 is 228mm market cap plus net debt of about 300mm = 528mm EV. On 250mm Ebitda that is an EV/Ebitda multiple of only 2x while metal mining comps trade at north of 6x. Sure, S needs a Cuban discount but it also mines Ni and Cu and the world is electrifying. Fair to put a 5x multiple on it. By this math, S should be at $2.50 during the course of the year as the market realizes Ni and Cu remain well bid and S reaps the benefit.
And in 2017 when Ni was at $4.00 and S had an EV of $1.3bln (compared to today at $528mm and a way cleaner B/S with no debt maturities for almost 5 yrs). The stock in 2017 was as high as $1.85 which was an 8.8x EV/Ebitda multiple at the time. Sure they sold some stock so there is is some dilution but the cash flow now and the valuation are extremely compelling.
I think this hits $2.50 by the 3Q22 as retail investors realize just how cheap it is trading and how powerful the markets are for Ni and Cu. Whether you buy is at $0.55 or $0.57 is irrelevant. Just buy it on the fundamentally cheap valuation.