This is probably how much our AL80 worth per tonne.
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From 2010 Annual report page 9
Gross Revenue: $2,735,528
Net profit: $1,008,021
Once off landfill cost: $545,829
Total plant throughput: 13,627 tonnes from Alcoa and Sims
So the actual net profit if landfill didn't happen is
$1,553,850 or ($114.03/t) and actual cost of production is $1,181,678 or ($86.72/t)
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From 2011 Annual report page 6
When Geelong plant operates at full capacity, it is expected to process 35,000t of landfill salt slag and 24,000t of salt slag and dross from Alcoa and Sims.
Recovered products
based on 35,000t of salt slag MHM can recover
3,500t of aluminium
14,000t of AL80
17,500t of salt&potassium
based on 24,000t of salt slag/dross MHM can recover
9,600t of AL80
Revenues/EBIT/Cost
Now assume MHM can sell aluminium at $2,000/t and AL80 at $P per tonne.
As we know that no revenue from AL80 in FY2010, so we can assume the net profit per tonne for processing the material for Alcoa and Sims is about $114.03.
1. Alcoa/Sims
Then based on 24,000t
24,000t x 114.03/t = $2,736,720 (pre-tax profit to MHM)
revenue or net profit from AL80
9,600t x $p/t x 60% = $5,760 x p
2. Landfill
Now, the salt slag from landfill.
cost of production on 35,000t of salt slag
35,000t x -$86.72/t = -$3,034,500
But Alreco only received 60% EBIT therefore the cost should be 60% of -$3,034,500 = -$1,820,700
revenue or net profit from aluminium and AL80
3,500t x $2,000/t x 60% = $4,200,000
14,000t x $p/t x 60% = $8,400p
p.s. no idea how much are salt/potassium worth.
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Now, MHM has said Geelong plant expect to earn $8.6m pre-tax profit once operate in full capacity. If I sum up all the components above.
($2,736,720 + 5,760p) + ($4,200,000 + $8,400p) - $1,820,700 should equal to $8,600,000.
Then in MHM's valuation they have assume that they can sell AL80 at around $246.43 per tonne.
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Note: the cost of production per tonne may not be accurate, for example on September 2011 quarter total throughput is 5,540t but cost of production is $990,000 which works out to be $178.7/t
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In conclusion,
to value MHM's first US plant we can use these figures
tolling profit: ~1.33 x $100 = $133 (100% profit in oversea operation)
Al80 price per tonne: ~$246
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ALL IMO