Worth investigating, here’s a brief overview. DO YOUR OWN RESEARCH THOUGH
At 260p, Acacia Mining (LON:ACA) is worth £910million. By any measure, this is cheap when you look at the company’s staggering world-class asset portolio alongside the extraordinary tonnage of stockpiled gold ore (unable to be exported).
Prior to the mammoth disruption that has been Magufuli’s well-orchestrated shenanigans, Acacia was priced at 574p.
Thus, Acacia’s shares will need to double from here for the company to be valued at anything approaching a reasonable valuation (comparable with its peers). Of course, if that happens it will mean the market will have woken up by then.
Have a look at the last 2 years of the company to gain an idea as to how big of an effect the Magufuli’s intervention was, their supply lines are hitting above targets and their huge stock pile of gold ore during a high in gold prices. Also possible buyout by Barrack fairly soon.
at 260p, and disregarding the rising gold price – should the company’s valuation begin to normalise, Acacia is trading well below its intrinsic and optionality value.
Optionality value, for those unaware, is based on the quality of a company’s project pipeline (exploration projects that have an implied value based on the varying degrees of probability that the projects will eventually be developed into producing mines).
The share price should, therefore, could begin to normalise to ‘pre-Magufuli intervention’ prices (574p) where the company reported annual gold production of 829,705 ounces, EBITDA of US$415 million, operational cash flow of US$318 million, and a substantive increase in the net cash position to US$219 million on $1.1billion of revenue
Good luck, and always do your research!