Financing and Valuing the New Established Mining Company
The coal market is growing every year. This is an alternative source for energy beside oil and natural gas. World's demand of coal is around 4.9 billion metric tons per year. Indonesia itself is the third largest coal producers in the world. In the next future, where oil price is steadily growing, there will be a huge demand for coal. Furthermore, there is a possibility with current technology where we can extract oil from coals that have relatively low and medium calorific value. rnPT. MBC is a subsidiary company that established in the early 2005 to manage and operate a mining authorization license in East Kalimantan. It has currently more than 100.000 hectares of mining concession with coal reserve approximately around 2.3 billion metric tons. Considering the limitation of capital, PT.MBC is currently looking for a strategic partner to start producing the coal. The minimum target that company wants to achieve is 2.000.000 metric tons / month. In order to do that, the company needs to know the value of this asset. The company is expected to be gathering capital through the combination of loan and equity investment which proportion is already determined by the management.rnThe valuation methods used in investment analysis are Discounted Cash Flow Valuation and Relative Valuation. Since the company is at its initial stage, its rnrnhistorical price is not yet available; hence some of its ratio is based on the average ratio in mining industry. The comparable analysis is used to compare the firm's asset value to a relatively same size company in industry. An estimation of firm value will emerge from both valuation method, and by comparing each result with the average value available in the market, especially South East Asia region, we shall be able to decide which valuation method would be closer to market value.
|M00104||(wh)||Available but not for loan - Missing|
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