Timok Valuation On May 8, Nevsun received an offer for a buyout which was rejected for being too low. The management said that the offer undervalued Timok Copper-Gold Project. I went on Nevsun's board and found this enalysis by Eight Capital.
"Valuation - In our NAV, we currently value the Timok Upper Zone at $1,003Mln (10% discount) and Bisha at $156Mln (8% discount). Including balance sheet items as at the end of Q1/18, our current NAV is C$5.44/sh. On a further derisked 8% discount basis under the current proposal, we would value Timok Upper Zone at $1,216Mln. At C$4.00 per NSU share, LUN is offering ~$940 mm for Timok Upper Zone or 0.77x our 8% discount valuation, and would essentially get the Timok Lower Zone interest for free (46% to NSU after completion of a Feasibility Study). Under these assumptions, we believe the Lundin offer is inadequate. At C$1.00 per NSU share, ESM is offering ~$235 mm for the rest of the company. Netting off $150 mm of cash at the end of Q1, ESM is offering ~$85 mm for the operating Bisha mine in Eritrea, which equates to 0.54x our Bisha valuation. On this basis, we believe that ESM's offer is inadequate. If we value Timok using an 8% discount rate and use a 1.0x - 1.2x NAV multiple to Timok Upper Zone and 1.0x NAV multiple to Bisha, we arrive at a valuation range of C$6.25/sh to C$7.25/sh. A 1.2x NAV multiple is typical for M&A in the base metal space and also would offer Timok Lower Zone optionality."
Here is the link to it.
https://www.stockhouse.com/companies/bullboard?symbol=t.nsu&postid=28008829
It is kind of similar to Santo Tomas in a few ways. Timok has studies done in a particular part of the property while another part has big exploration potential. Same for Santo Tomas but Santo Tomas' studies are old because the project has been in legal mess for so long. But still, there are studies on part of the property while there is exploration potential on another part of the property.
Another thing that I found interesting from the evaluation is this "A 1.2 x NAV multiple is typical for M&A in the base metal space and also wold offer Timok Lower Zone optionality."
Anyway, this is it. Feel free to comment on what you think about it.