Abstract
In early October 2022, the ASX-listed mineral exploration company Sheffield Resources announced its final investment decision to proceed with the Thunderbird mineral sands project, its only project under development. Olivia Montalbano’s investment banking firm decided to provide coverage of Sheffield’s stock and asked her to determine a fair value estimate. The investor’s bankable feasibility study (BFS) provided an estimate of $1.84 per share, but the stock price was only $0.47. What troubled Montalbano was that the BFS employed a real discount rate of 8 per cent, which seemed low, given typical mining project risk. Montalbano’s immediate task was to develop her own estimate of the project’s cost of capital.
Original language | English |
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Pages | 1-10 |
Number of pages | 10 |
No. | W34913 |
Specialist publication | Ivey Publishing [Case Studies] |
Publisher | Ivey Publishing |
Publication status | Published - 11 Dec 2023 |