First look at AR using a DCF modelHi all - AR hit my radar few days ago so I did a first pass at valuation.
Note: I work for a fintec running valuation models on 9000 stocks each night - DCF is one of the tools available so perfect chance to use it here
Current valuation:
I ran the DCF on Stockcalc (www.stockcalc.com) for AR-T as is - getting 51 cents per share valuation. This is before updating the model to reflect new debt or cash flow expected from Magino but with the newly updated number of shares (766 million)
Then I added 50 million in annual cash flow to the DCF based on page 309 here
https://s22.q4cdn.com/115151820/files/doc_downloads/technical_reports/magino/MaginoTechReportFINAL_2Mar2022.pdf
And added 350 millon debt to the model
Those 2 changes moved the valuation to 56 cents which means the discounted cash flows were essentially offset by the debt. Makes sense - My WACC was 11.5% and over 20 years, 50 million discounted each year by 11.5 totals 385 Million in discounted cash flow - Use excel if you want to confirm.
Every extra 10 million in free cash flow at that point added about 10 cents to valuation
I then updated the cost of capital down 1.5% with the increase in debt in the capital structure (dropped WACC from 11.5 to 10%) to see what impact. Valuation changed to 86 cents
Just my first pass at this but given the DCF model is very close to current price it gives me some confidence in this quick analysis.