Derisking of NAU – another setback I have followed this co. since late 2006. The announcement of the financial package for Kaunisvaara was an important milestone, and the content was really disappointing (especially the big dilution due to the big share issue) compared to the signals sent from the management during more than a year. In my eyes NAU has tradition of disappointments regarding the content of very important milestones when they are passed.
The next important milestone is realization of the announced financial package. It remains to be seen if NAU can raise the targeted amount of capital and on what terms (share price in the share issue, and the bond interest rate).
Yesterdays announcement also included reduced estimate of the DCF for Kaunisvaara, mainly due to lowered level of normal production from 4.7 to 4.4 mtpy iron ore concentrate and a bit longer ramp up period. Lowered OpEx and higher CapEx due to logistics 100% NAU-owned only have a negligible effect on my DCF.
I have revised my unrisked DCF per share to NOK 12 at the end to Q1’12. My risked DCF is NOK 10 at the end of Q1’12 under the condition that NAU raises USD 250m in new equity at NOK 8 per share. Risked value of NOK 10 also includes the DFS for Hannukainen if it is published before the end of Q1’12. My risked value at the end of 2012 is NOK 11. In my view the shareholders have put more new equity into NAU than the combined value of DCF of Kaunisvaara and Hannukainen when NAU is fully financed post commencement of production in Hannukainen.