A reference price for buyout or no buyoutConsolidated Thompson was acquired recently, and its website says that it has two properties, one property has more than 900M tons, and other more than 600M tons of 30% of iron. Do a rough estimate that it has $72B of iron in the ground, and stock sold for about $5B, with initial production in 2010.
RGX is likely to have 80 M tons of TiO2, iron and vanadium, about $600 per ton (use a low conservative number), so total value about $48B (about the same value as 32M oz of gold), and will start producing in Q2 2012.
In case RGX will be acquired in Q2 2012 (or Q3 2012) with comparable valuation of Consolidated Thompson in Q1 2011, RGX should be $15 to $20 (this range depends on how Consolidated will be fully diluted during the transaction), assuming maximum dilution 200M shares for RGX. But as TiO2 is going up in price, thus the buyout price should be higher.
If RGX is allowed to be independent and reached the commercial production (2015?), each year it will make $1.2B income (assuming $400 profit per ton, a very conservative estimate), divided by 200M shares, we get $6 income per share. KRO, another titanium oxide company has a PE over 20 with a lower grade production and higher cost, so we use 20 PE for RGX, RGX should be $120 per share. If RGX distributes 1/3 as dividend, it will give out $400M per year, or each RGX share will get $2 per year of dividend for 30 years.