RE:RE:RE:I should show my math given I said "easy $3/share"Below is the best valuation I've seen, written by someone who is clearly an insider with deep financial knowedge and industry acumen.
I am re-hashing it as it's relevant to the buy-back discussion.
black4444 wrote: We’ve had this thing underwritten at north of $2.00 on a liquidation basis for quite a
while now.
Here the math as at Mar 31/20:
Working Capital - $23m
As per the March 31, 2020 financials.
Power Plant - $108m
This is simply the NPV of $11m of free cash flow + $110m of terminal value in 2035 all discounted back to PV at 10%. An infrastructure buyer would hopefully consider the 10% conservative.
Mackenzie Licenses - $59m
This is 782,500m3 at $75/m3. Comparables include the 2015 deal with Canfor at $150/m3, the 2016 JV with Dunkley at $133/m3, the 2019 Canfor to Interfor deal at $172/m3 and the 2019 Ft St James sale to Hampton (essentially the AAC) for $89/m3. Dunkley bought 150,000m3 via C&C in 2019 but that valuation included mills and other stuff so that results in a big outlier.
Mackenzie Mill - $28m
We’re using book value here and the range could be from zero to who knows what. The assumption is this can produce some cash flow at some point in a lumber cycle and therefore is worth something.
Power Plant Debt - $(62m)
As per the March 31, 2020 financials.
Misc Other Liabilities - $(20m)
This is just miscellaneous other stuff that needs to be paid or assumed and may be a bit light by $10m to cover severances, fees etc.
So this all sums as follows:
$23+$108+$59+$28-$62-$20 = $136m
On 46.9m shares that gives $2.90 per share.
The ACC is subject to the NDP’s new forestry policy on transfers, so some risk there and who knows what the mill is really worth, so feel free to discount those.
So BWC and Polar, are you happy with valuing your blocks at sub $1.00 based on a few thousand shares a day or do we see a value maximization strategy here? Mr Miller? Polar has someone who specializes in these situations. Are you watching this Sir?