Tuesday, 6 March 2012
Last chance on EMED before launch?
However, long-time readers will know that I have had half a million odd shares in this AIM listed prospective mining company since 2009. In all that time the Company has been seeking to re-open the Rio Tinto mine in Andalusia in Spain. Corruption and general bureaucracy has delayed this event for at least 2 years longer than necessary.
Finally though this month the stars are aligning. Firstly, the corrupt PSOE party in power is about to lose an election in 3 weeks and the incoming PP have opening this mine and getting the desperately needed 1600 jobs up and running.
Then a Chinese company signed an off-take deal to buy the copper that will be produced, guaranteeing future sales. Then yesterday, Goldman Sachs was appointed, again via an off-take deal, to produce the £175 million of financing. This is all the money the company will need to re-start production at the mine.
When up and running the mine should produce about $150 million a year in profits, so the debt won't take long to pay off, on a DCF of 10 years you would expect EMED to be a billion pound odd business. At 14p which it is today it is valued at £120 million, so this share could eventually go for nearly 100p (there are some future options which will dilute away some of the value).
Even better, having met the CEO a few times, the Company has a strong management team who have piloted this through 4 years of pain and frustration and now pulled off some great, pre-start deals - strong management is the key to any good company, especially on AIM
Personally I see the final permitting as pushing this share at least 100% over where it is today, with 70-100p over the next 2-3 years.
(NB As this is dual listed, you can buy in an ISA)