VALUING A BIOLGIC ASSET
So did you know that IAS 41 states "he accounting for agricultural activity – the transformation of biological assets (living plants and animals) into agricultural produce (harvested product of the entity's biological assets). The standard generally requires biological assets to be measured at fair value less costs to sell."
What might this mean to AEG?
https://www.nrcan.gc.ca/forests/report/area/16399
The Boreal Shield has more forest land and wood volume than any other ecozone in Canada, these forests are relatively slow growing, producing an average wood volume of 118 m3 per hectare (ha)
118 x 1.2mill = 141,600,000m3
https://www.cbc.ca/radio/the180/the-oilers-are-canada-s-hockey-team-caregivers-need-more-than-just-recognition-and-the-power-of-dog-poop-1.4087566/softwood-lumber-what-s-a-tree-worth-anyway-1.4089386
https://www.nrcan.gc.ca/forests/industry/current-prices/13309
If we pretend all this forest is nice sawlogs then its roughly $200/m3
So that would give a value of $28bill
If we pretend the whole forest is only good for firewood at $50/m3
Gives a value of $7bill
Now lets assume im wrong by a factor of 100
That still gives a value of over $70-280mill on the balance sheet
Valuing based on wood cut
AEG are allowed to harvest 140k solid cubic metres of wood that would be sold for sawlogs for roughly $30mill
https://www.nrcan.gc.ca/forests/industry/current-prices/13309
They will have a 20 year license so thats $600mill over the initial 20 years in revs from just sawlogs
Valuing based on Coalswitch
So we know CS increases the yield of any forest as all the waste and residue can be used to make it. It essentially doubles the amount of wood you can use above the "cutting allowance"So 140k solid cubic metres x2 = 280k
280k m3 to tonnes needs a density calculation which can be above or below 1. I'll just assume 1:1
So 280k tonnes of CS produced.
We know from the recent AGM presentation that CS makes about $100/profit/tonne
So $28mill profit a year
Put on a conservative PE of 15 and thats a $420mill mcap or £330mill Mcap
£330mill mcap = 33p
