Our target price of £21 is derived from the average of our DCF-based NPV and multiples-based valuations. Our DCF analysis is based on life-of-mine valuations of the industrial assets using a weighted average cost of capital (WACC) of 8.0% for all of its industrial assets. We use a 5.5x multiple on EBITDA for 2025 and 2026. Our NPV is calculated based on long-term equilibrium commodity prices and key assumptions avaiable in our Metals & Mining Strategy report.

The risks to our target price and earnings forecasts relate to our commodity price and currency forecasts.

Industrry-specific risks include government actions, such as controls on imports, exports and prices, new forms or rates of taxation and royalties, and increased government regulation. South African miners started paying mining royalties in March 2010, in line with global best practice and market expectations.

Higher-than-forecast inflation in the mining sector could lead to near-term margin compression, but should support higher commodity prices in the long-term.

Skills, electricity and water shortages in South Africa may affect production and mining inflation more than we anticipate. As around 40% of Anglo's assets are in South Africa, this could erode Anglo's global competitiveness.

Over-estimation of mineral reserves could weaken our investment case. We assume long-term reserve replacement at a fixed capital cost to EBITDA. Failure to discover new reserves or expand existing reserves could therefore impact on Anglo's valuation.

If any of these factors proves to have less of an effect than we anticipate, the stock could materially outperform our target. However, if the impact of these factors is greater than we anticipated, the stock could trade below our target price.