Sandur Manganese

I agree this is a unique case but this is what Corporate Finance is all about.

Consider this that you’ve to bid for a mine for the next 10 years, how you do that is you estimate the cashflows from the Iron Ore segment for the next 10 years and discount them at a viable IRR. For Sandur I choose to do this at 15% – 3 MTPA Iron Ore Capacity and 0.28 Mn Ore Capcity. Choose a starting rate, inflate it at rate of Inflation and choose the avg margins for the next 10 years.

I agree this doesn’t give you the best picture but its still better than having nothing and maybe missing out on a good opportunity. Cash flows is what matters, you want to be conservative choose a low starting realisation for the Minerals.

I add the remaining businesses to this value at book value cost because there is a lot of uncertainty in those biz at this point of time.

For me Sandur is starting to look attractive, I’ll start to accumulate below 1150.