FCF yield

There was a nice Twitter thread on $MKO.V yesterday, which lays out both the bull and bear thesis on Mako:

Reading through it, I realized that I had been using $USD figures for FCF but $CAD figures for EV 🤦 (referring to my previous post), which gave me a FCF yield of about 10%: ~$5M unlevered FCF on $214M EV.

Except it’s US$5M FCF or CA$6.5M -> FCF yield ~ 12%. OK, not a huge difference, whatever.

Bear thesis

The Twitter thread above shows what the known unknowns are for Mako:

  1. life of mine
  2. throughput (oz per year)

Point 2. is not really unknown though. Akiba has said multiple times that he doesn’t think we can produce more than 1000tpd given the geography.

So life of mine (or total resources) is the big mystery here.

Akiba is confident we have a couple of million ounces in the ground. The thesis, therefore, relies on trusting him on that point.

Given what he has communicated so far and what ended up happening/being true, I have no reason to think that he’s wrong or that he’s lying.


Until next time, stay cool & stay invested!