RE:RE:RE:Nickel 28 Files Fiscal Q3 Financial StatementsI have revised some amounts based on data from the last four quarters...
Here is my assessment of the situation.
Ramu's debt will be completely repaid around June 2026 (or earlier, if nickel and cobalt prices increase or operating costs decrease).
Debt balance as of January 31, 2023: $55,817,051
Debt balance as of October 31, 2023: $48,975,693
Cash as of October 31, 2023: - $9,805,248
Net debt as of October 31, 2023: $39,000,000
My estimate of the share of Ramu's expected operating surpluses attributable to Nickel 28 (distributed every 6 months), considering excluding price appreciation (see bottom note) :
6-month period ending December 31, 2023: $10,000,000 $12,500,000
6-month period ending June 30, 2024: $10,000,000 $12,500,000
6-month period ending December 31, 2024: $11,000,000 $12,500,000
6-month period ending June 30, 2025: $11,000,000 $12,500,000
6-month period ending December 31,2025: $12,000,000 $12,500,000
6-month period ending June 30, 2026: $12,000,000 $12,500,000
Total: US$66,000,000 US$75,000,000
We must add the operational and other expenses, financing and other costs of Nickel 28 which I estimate (excluding deferred taxes which are a non-cash expense) :
3-month periode ending December 31, 2023 : $2,500,000 $3,500,000
12-month periode ending December 31, 2024 : $10,000,000 $14,000,000
12-month periode ending December 31, 2025 : $10,000,000 $14,000,000
6-month periode ending December 31, 2023 : $5,000,000 $7,000,000
Total: US$27,500,000 US$38,500,000
Result : US$39 million - US$66 million US$75 million + US$27.5 million US$38.5 million = 0.5 2.5 (about zero)
Once the debt is repaid, Nickel 28's share in Ramu will automatically increase by 32% (from 8.56% to 11.30%), which corresponds to approximately US$31,500,000 US$33,000,000 per year (US$24,000,000 US$25,000,000 * 1.32).
Thus, Ramu's revenues of US$31.5 million US$33 million minus Nickel 28's expenses of approximately US$10 million US$11.5 million (there is no more financing cost) equal a net profit of US$21.5 million or CA$28.4 million per year, after conversion to Canadian dollars (exchange rate 1.32).
If the number of shares outstanding remains the same (92,377,198 shares outstanding), I estimate net earnings per share to be approximately CA$0.30 per year.
Using a price-to-earnings multiple of 18X, the share price should then be around CA$5.40.
Note :
Share of Ramu's operating profits attributable to Nickel 28 for the last 12 months ended:
- January 31, 2023: US$22.7 million
- April 30, 2023: US$27.8 million
- July 31, 2023: US$27.8 million
- October 31, 2023: US$21.7 million
Annual average: US$25 million