IBG 0.00% 1.3¢ ironbark zinc ltd

It's a doozie alright, Yeatesy! How about the valuation...

  1. 3,647 Posts.
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    It's a doozie alright, Yeatesy! How about the valuation paragraph:

    Valuation $0.14/sh: We have decreased our valuation to $0.14/sh (from$0.26/sh) based on our revised zinc price forecasts and incorporating the lower IBG share price. We feel the decrease in the zinc price is overdone and should return to c.US$1.25/sh long term to encourage further supply. Concluding further vendor financing transaction and entering into a strategic partnership could result in an upward re-valuation.

    More holes than Swiss cheese. What was their earlier zinc valuation? What is it now? ("our revised zinc forecast"?). Then throw out $1.25 as their forecast, but keep the $0.14 share forecast? Vendor financing could result in an upward valuation... oh really?

    Later in the report, there is this explanation: The main reason for the lower share price is related to the lower zinc price (-32%) which is currently as c.US$1.11/lb versus a peak of US$1.63/lb in mid-February.

    Simple check of their last report and Simon, before he left Patersons, explained in revising the SP price target from 35c to 26c that: the main reason for the lower share price appears to be the lower zinc price (-9.2%) which is currently as c.US$1.46/lb vs a peak of US$1.63/lb in mid-February. So Simon left and the new analyst, Cathy who missed the trip to Greenland, hence no ownership or close understanding of the project does a sloppy cut and paste to reduce the price based on zinc $1.63, which Simon had already done in revising last time.

    Then page 3 - Sensitivities is just a mess. Cathy throws out $0.48 per share based on "current spot pricing, highlighted in yellow". Yellow highlight is across $1.50 per lb for zinc lol. But it gets better as the same table has $0.14 share price based on $US1.00 per lb for zinc.

    So what do I decipher?

    Looking at same sensitivity analysis and agreeing with them that $1.25 per lb of zinc is realistic, valuation should be around $0.30 based on their very conservative mine life and financing assumptions. 30c is a stark minimum where the potential is clearly anywhere north - 50c is more realistic than 14c.

    And VLF, Kissie and other record keepers, am basing this on the obvious assumption that vendor financing will indeed result in an upward valuation!

    Glad to be BIG on IBG, but it is never easy
    Last edited by Upmarket: 07/10/18
 
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