NSU VALUE...BOOKMARK THIS!!! Updated NSU Value:
Value per NSU Timok feasibility study and NSU stock analysts:
Upper Zone CAD $5.94 per share 2018 (see below) vs CAD $7.46 per share at start of production (2020)
Lower Zone US $250 million (CAD $325 million) = CAD $1.04 per share
Bisha US $210 million (CAD $273 million) = CAD $0.875 per share
So add them up:
$5.94 per share for UZ
$1.04 per share for LZ
$0.875 per share for Bisha
= CAD $7.855
US $125 million cash (CAD $162.5 million) = CAD $0.50 per share
Use your own discretion as to whether an acquirer should pay for cash on hand. You could argue whether or not this is cash on hand or really should have been incorporated into capex / preliminary capex.
On that note, out of the approximately / almost $700 million capex for the upper zone there’s a whopping $100 million contingency. They have thrown everything under the sun in there it would appear. They’ve set themselves up for hopefully positive surprises. That extra 100 million arguably detracts significantly from what would have been an even higher NPV. In other words, if you actually end up not spending the contingency then project numbers improve.
So the magic number is minimum CAD $8 from all the talking heads / not so anal analysts...I prefer to call them the acquiescers ha ha ha.
By their own numbers, a minimum bid that would reflect NSU’s value has to be around the CAD $8 per share.
Oh wow great that seems fantastic...if someone would actually bid that!!!
No silly “investor”, this is where you grow a set of gonads and flip the big bird to anyone who tries to steal your worth from under you.
Even by the acquiescers’ standpoint, it would be pretty hard not to require an offer in the ballpark of CAD $8 (or ~ US $6.15).
AGAIN, THAT IS A MINIMUM VALUE, here are some other salient points:
- Well copper price has come off significantly so UZ is not worth as much as you say it is...this is easily handled by giving the potential acquirer the biggest f-ng middle finger ever. Easy, then don’t bid for our shares, we will happily continue developing the project on our own as we would have done anyway. The reality being that the dip in copper now may actually result in a higher price down the road and the dynamics of which are greatly supported for an improving copper price. Also from a quality standpoint, the UZ copper grade % far surpasses the vast majority of comparable projects.
- The value attributed for the lower zone is a farce. As I have argued. The lower zone is on the order of 7x the magnitude/size of the UZ (just from NSU’s ultimate 46% ownership perspective). Overall the lower zone is on the order of 15x the magnitude of the upper zone. You could practically argue that the lower zone is a huge gold mine if it better suits value from a marketing perspective ha ha ha. So, for reasons I’ve mentioned previously (copper grade and geology/timing) the upper zone will not have 7x the NPV of the UZ. But would it be crazy to think it at minimum might have an equivalent overall NPV as the UZ. Or dare I say double or triple the NPV of the UZ (from a production timing standpoint)??? In other words, even at an $8 price you are essentially stealing the Lowe Zone...of that I am convinced.
- NO EXPLORATION POTENTIAL INCLUDED. Assuming NSU had no mines or projects under development...what would you pay for their mining licenses / prospective land etc.??? That’s arguably worth something and considering there are mines/finds already in the vicinity then that only proves that the land is highly prospective. What it is worth is highly debatable but it has to be worth something (Q3 drill results may have something to say in regards to such value).
- NO PREMIUM INCLUDED. The logic here is why hand over anything if you’re not making it worth my while? In fact, just from the upper zone perspective, we’re handing over 2 years of time value for nothing which works out to over CAD $1.50 per share. FOR WHAT? Just because we were blessed with an offer ha ha ha? That’s straight up value. Are they giving us something we don’t have already? And in that regard the answer is not really. NSU IMO is perfectly capable at developing Timok on its own. We can also reiterate the theft of the lower zone here as well. So in other words what are you giving me that I wouldn’t have had normally as I would go about developing my mines. By selling now, NSU would just hand over the development value of CAD 1.50+ per share. That would assume someone paying 1x NAV of CAD $5.94 per share which in the case of Lundin they have only offered CAD $4.75 per share. And some dumb dumbs here are all giddy that we got $4.75 per share offer ha ha ha. Recall, there is a precedent of acquirers paying 1.0x NAV for mines of significantly lower quality than Timok UZ.
So in the end, unless an offer comes out in the CAD $8 +++ range then I say f right off as NSU will be much better off alone. IN FACT, WAIT 2 YEARS AND IF NSU LOOKS GOOD NOW WE MIGHT LOOK EVEN BETTER TO A POTENTIAL ACQUIRER DIFFERENCE BEING WE WONT BE STARTING FROM HERE BUT $3-4 higher.
From a previous post:
Value - Back of the envelope analysis...
Timok was recently valued by the company at an NPV of US $1.82 billion (8% discount rate and $3.15/lb copper) at the start of constructon which is anticipated in July 2020.
CURRENT VALUATION
Timok's NPV at June 30 2018 (1.5 months from now) is valued at US $1.45 billion.
Using a fully diluted 312 million shares we get the following valuations:
- Equates to US $4.64 per share.
- Equates to CAD $5.94 per share (@ 1.28 exchange)
Assuming this can be fully valued in the shares and the current stock close we can say:
At US $4.64, today's close of $3.48 represents difference of US $1.16.
At CAD $5.94, today's close of $4.47 represents difference of CAD $1.47.
- In other words, current stock price is representing 75% of Timok NPV.
- We would need to rise 33% from today's close to achieve the US $1.45 billion Timok valuation.
FUTURE VALUATION (July 2020) - Approx. 2 years from now.
At Timok NPV of US $1.82 billion valuation.
- Equates to US $5.83 per share.
- Equates to CAD $7.46 per share
- Essentially equates to an additional 25% increase over and above the full current Timok valuation over the 2 years.
At US $5.83 - Today's close of $3.48 represents difference of US $2.35.
At CAD $7.46 - Today's close of $4.47 represents difference of CAD $2.99.
- In other words, current stock price is representing 60% of future Timok NPV.
- We would need to rise about 68% from today's close to achieve the US $1.82 billion Timok valuation (in 2 years).
Valuation does not account for or include:
- Bisha cash (a lot may be spoken for with pre-Capex) costs.
- Bisha earnings.
- Bisha exploration potential.
- Timok Lower Zone.
- Timok exploration potential.
- Assumes no changes in underlying commodity pricing.
- Assumes no additional share dilution.
- In other words it only includes Timok upper zone known deposit.
Some musings...
- Is CAD $10 that far of a stretch?
- Am I off-base on anything here?
- Sell now and get a few bucks or let Nevsun develop Timok and other assets and look for a double, maybe more.