Cantor Fitzgerald's target price of CAD 2 Cantor Fitzgerald has indexed a target price of CAD 2 within one year. Often, course goals are set with something with the wrist times Pi and generously rounded up.
Cantor chose a two-dimensional approach for the target price: half of the NAV plus half of the five-fold EBITDA.
It is now interesting to see how these values are actually put together.
1. NAV of Nickel 28 to date:
- 196.7m $: Ramu Direct Investment, 1 x NPV (8%)
- 36.9m $: Dumont, 0.4 x NPV (8%)
- 10.2m $: Turnagain, 0.2 x NPV (10%)
- 3.6m $: (Book value of the remaining royalties including Flemington and Nyngan (Scandium SCY)
Total: $ 247.4m
plus $ 7.9m in cash and investments
minus 96.6m $ debt ex Ramu
Net NAV: 158.7 $, resp. 201.8m CAD. At 84.9m shares: CAD 2.38.
2. EBITDA
In addition, there is the expected short-term EBITDA ex mine Ramu. The basis for the cash flow is the 8.56% share with $ 28m p.a. The operating debt should be repaid in 2021. From 2022 there will therefore be 35% FCF in favor of nickel 28 resp. 8.9m p.a.
The CAPEX debt should be repaid in 2025. Then the share increases to 11.3% and Nickel 28 receives around $ 37m p.a.
For its calculation, Cantor has an average EBITDA of $ 0.26 per share or 22m $ p.a. assumed: 0.33 CAD per share, factor 5: 1.65 CAD
3. Price target calculation
- 50% of the NAV of 2.38 CAD = 1.19
- 50% of the EBITDA, factor 5 of 1.65 = 0.83
Rounded: Target price 2 CAD
Conclusion
If you want to invest in a nickel producer with positive cash flow plus as of 2022 with promising nickel projects in a safe jurisdiction (Dumont and Turnagain in Canada), you should take a closer look at Nickel 28. The calculations assumed a nickel price of $ 8.50 / lb. If the price should fall again, then of course the price target is disproportionately reduced - and vice versa, of course.
For information: In the Project Execution Plan (PEP) update for the construction of Sunrise in Australia, Clean Teq (CLQ) has a nickel price of $ 24,200 / t resp. 11 $ / lb assumed.
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