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Sunday, November 02, 2008
Mincor (MCR MCR.ax)
They have net working capital of $76M (all amounts in AUD) and total cash and receivables of $111M. With about 200M shares outstanding they have a net cash value of 37c. They are debt free. When you add in the value of their hedge book (estimated at about $39M) then that rises to about 56c per share. The share price closed below 70c on Friday.
Their cash costs per pound are about $5.79 as of the end of September 2008. The current (2nd November) Nickel price in AUD is $8.05.
They have put in place a plan to keep cash costs within $5.4 - $5.7 per lb and are now planning to mine up to 25% less ore if prices remain poor.
A reasonable estimate of Nickel prices for valuation is $11.21 AUD ($8.47USD) . That is based on the 2002-2007 average Nickel price and Australian Dollar USD exchange rate (AUDUSD 0.755). Deutsche Bank's research report on Mincor is based on $9USD Nickel and an AUDUSD of .74. They value the company at $2.80. They traded as high as $5.19 in the last 12 months.
With a conservative 4 times upside and selling near cash and equivalents this looks like a great opporunity.
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Analyses are prepared from sources and data believed to be reliable, but no representation is made as to their accuracy or completeness. I am not paid by covered companies. Strategies or ideas are presented for informational purposes and should not be used as a basis for any financial decisions.
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