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As the first company to commission a modern gold mine in a growing gold camp
in Senegal, options have opened up for MDM, all of which benefit investors.
MDM also has an additional project in mineral sands, Grande Cote.
MDM is considered a takeout candidate due to its strategic positioning.
Control of Sabodala would provide leverage in gaining access to gold
resources already identified in the area. A TAC analysis indicates a takeout
value of US$540 million for Sabodala (70% premium from current NPV).
MDM is undervalued, trading at 0.55x NAV. Even if we exclude Grande Cote,
MDM is still undervalued, trading at 0.85x NAV. At the current share price,
investors would be getting Grande Cote for free. Grande Cote has the
potential to be a significant operation, producing 7% of the world’s zircon.
We also examine the value that can be created in a combined MDM/Oromin
operation, which could be accretive to NPV by 34%. Sabodala had been
built with expansion in mind. We estimate that throughput could be doubled
to 4 million tpy for ~ US$60 million.
our recommendation is a Speculative Buy.
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