Business Valuation of Intex Resources ASA

Johannes Brun Johansson

Student thesis: Master thesis


The purpose of this thesis is to find the fair share value of Intex Resources ASA as of 18.02.2013. The purpose is accomplished through analysis of the nickel market, strategic analysis of Intex & the Mindoro project and financial analysis of Intex. In the years pre-ceding the economic recession, the market for nickel was thriving with prices at an all-time high. However, the economic turmoil of 2009, along with the emergence of the cheaper ferro-nickel NPI, caused the market to plummet. Since then markets have recovered, but has yet to stabilize completely. Over the next few years, a large amount of new nickel projects is expected to cause the market to enter a period of oversupply. However, because of the increasing demand from China and India, as well as a lack of new projects in the long-run, the future price prospects of nickel is positive. The primary asset of Intex, the Mindoro project, has potential to become one of the most valuable nickel operations in the world. Because of an innovative design which allows for extraction of nickel from limonite and saprolite ore in the same process in conjunction with internal energy generation, the project has potential to become one of the most cost effective nickel operations in the world. However, while the national government of the Philippines is positive towards mining, local groups on Mindoro has shown strong opposition towards Intex. As a junior mining company, Intex very much resembles a biotech company. They have no operational revenue and currently rely on their cash balance to fund their operation. Because of their considerable cash deposits and capital structure free of net-interest bearing debt, Intex is financially relatively low risk. Even without revenue generation, with the current cash balance they will be able to stay in business for another 24 months. The company valuation was conducted through a DCF analysis, where estimates made available from Intex along with reasonable assumptions regarding changes of those estimate where used as primary input. The DCF analysis was complemented by a comprehensive sensitivity analysis that tested the assumptions made about Intex. Finally, a relative valuation compared Intex to other junior mining companies. It was found that the theoretical fair share price of Intex was NOK 16.64 per share. The price is considerably higher than the market price which was NOK 3.89 per share at the cutoff date. The theoretical share price is considered reasonable, since it takes the fundamental value from the Mindoro project into consideration, which the market has failed to do.

EducationsMSc in Finance and Strategic Management, (Graduate Programme) Final Thesis
Publication date2013
Number of pages111