Ivanhoe Mines Ltd A > One hundred dollars
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ursusbrumae
2 stars January 15, 2017 04:59 am
What would it take for IVN to reach 100 dollars a share?
1. Scale up K&K by a factor of 2.5x from 8Mtpa to 20Mtpa, on an equivalent multiple of USD 1B, to 2.5B in capital, with sustained USD 1/lb operating costs; three-quarters the production of Escondida; no smelter;
2. Through expansion drilling, extend the mine life of Kipushi for another 10 years;
3. Copper prices go to USD 10,000/t (USD 4.50/lb, the old high);
4. Zinc prices go to USD 5,000/t (USD 2.25/lb, near the old high);
5. Earnings are reinvested at a 10% ROIC;
6. Six years elapse;
7. No significant technical or political challenges occur, which are not solved;
8. The stock gets a 20x multiple on free cash flow (a 5% yield) which is half the multiple of BHP or RTZ today, which by the way does not account for the tens of billions of debt they carry; and,
9. Platreef is valued at nothing.
In my estimation, none of these assumptions is on its own, implausible. Platreef isn't worth nothing. Almost everyone on this board and everyone I speak to focuses obsessively on #7.
"Congo? Have you lost your mind?! Nice assets...if only it were in a mining-friendly jurisdiction. Like Canada, perhaps?"
I just laugh.
Everyone focuses on what could go wrong. Few consider what could go right. Thus far a lot has gone right. Very right. I'm betting on a winner.
This is the greatest mineral discovery of the 21st century. The market always gets it right.
...eventually.
