$ABBRF : AbraPlata — Updated Independent Economic Analysis

Long-term Price Case $24/oz. Ag & $1,700/oz. Au
Flagship Project Diablillos
Ownership 50%
Mineral Resources66,425,000 AgEq ozs.
Shares Outstanding224M
Market Cap$8,736,000
Average Annual Production4,919,765 AgEq ozs.
Recovery59%
Payable Product39,358,121 AgEq ozs.
LoM8 Years
True All-in Cost (TAIC) $17.59/oz.
Gross Revenue$944,594,904
Total Charges ($28,337,847 )
Royalty NSR ($9,445,949)
Net Revenue$906,811,108
Total Operating Costs($279,674,860)
Operating Profit $627,136,248
Income Taxes ($219,497,687)
Total Capital Costs($155,479,000)
Net Income$252,159,561
Net Profit Margin27%
Absolute Cost Structure (ACS)73%
MTQ Score (Higher is Better) 0.4
True Value$1.13/sh.
True Value Discount (TVD)96%
Cash Flow Multiple5x
Net Annual Cash Flow$31,535,694
Future Market Cap$157,678,470
Future Market Cap Growth4,280%
Target$0.71/sh.

Notes: All Values in U.S. Dollars

According to our calculations, the AbraPlata story gets interesting above $17/oz. Ag. If Aethon has a breakthrough and is able to demonstrate that recoveries above 80% may be achieved, the AbraPlata story could get interesting below $17/oz. It’s a wait-see.

The Net Profit Margin and Absolute Cost Structure are middling, so we have assigned AbraPlata a 5x Cash Flow Multiple and Future Market Cap Growth up to 4,280%.

Merger Update: 30 July 2019 — Jane pays John to take her to prom…

On a fully-diluted in-the-money basis, AbraPlata shareholders will own ~48% of Diablillos following a business combination with Aethon.

As our assumptions were within a +/- 5% margin of error (+4%) regarding future ownership, our existing valuation dated 20 June 2019 remains valid, for all intents and purposes.