MLS.AX WACC - Weighted Average Cost of Capital
The WACC of Metals Australia Ltd (MLS.AX) is 8.0%.
| Range | Selected | |
| Cost of equity | 9.0% - 15.9% | 12.45% |
| Tax rate | 30.0% - 30.0% | 30% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 6.3% - 9.7% | 8.0% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.98 | 1.78 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.0% | 15.9% |
| Tax rate | 30.0% | 30.0% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 6.3% | 9.7% |
| Selected WACC | 8.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| MLS.AX | Metals Australia Ltd | 0.91 | 0.74 | 0.45 |
| AAJ.AX | Aruma Resources Ltd | 0 | 1.27 | 1.27 |
| GBR.AX | Great Boulder Resources Ltd | 0 | -0.85 | -0.85 |
| KGD.AX | Kula Gold Ltd | 0.08 | 1.47 | 1.4 |
| NPM.AX | Newpeak Metals Ltd | 0.08 | -0.41 | -0.39 |
| PUA.AX | Peak Minerals Ltd | 0 | 0.59 | 0.59 |
| SAU.AX | Southern Gold Ltd | 0.01 | 1.29 | 1.28 |
| SMI.AX | Santana Minerals Ltd | 0 | 1.91 | 1.91 |
| STK.AX | Strickland Metals Ltd | 0 | 0.49 | 0.49 |
| Low | High | |
| Unlevered beta | 0.51 | 1.13 |
| Relevered beta | 0.97 | 2.16 |
| Adjusted relevered beta | 0.98 | 1.78 |
MLS.AX's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for MLS.AX:
cost_of_equity (12.45%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.98) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.