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Non-Tech : HIDDEN VALUE STOCKS

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To: Herc who started this subject	12/7/2000 12:36:30 PM
From: tyc:>	of 47

Caveat emptor of course ! I have no competence in valuations.; what follows is simply logic. I put this simple proposition to you; "The value of any enterprise is based on faith that from this day forward future revenues (plus cash on hand) will exceed future expenditures. The value of the enterprise is simply the PV of that excess." The amount expended in the past on capital plant (etc) is of no consequence, (except that its salvage value increases revenue after production has ceased). On that basis the market should ascribe 3.3% of the value of the Antamina project to Inmet Mining T.IMN for it holds a 3.3% carried interest. The market is ascribing NO VALUE to it. Inmet is trading below the value of its working capital.. biz.yahoo.com Inmet's interest is described as "3.3% of the free cash flow after the owners have recovered their capital". Don't worry about the recovery of capital bit. Any necessary expenditure is per se excluded from "free cash flow". Free cash flow valuations are based on the benefits of an enterprise; what's left over from revenue after all necessary expenditures. Inmet will get its full 3.3% share of that. Noranda has a 33.7% interest, ten times as much as Inmet's share. However, Noranda's market capitalisation is probably 50 times that of IMN. That implies that a $1,000 investment in Inmet will provide the same share of Antamina benefit as $5,000 invested in Noranda. Pretty good leverage eh ! By the way, the market price of Inmet is down because the workers at their 49% owned Cayeli mine in Turkey have just gone on strike. And there are other unattractive features too. However, while we are talking about "hidden values", let me draw your attention to; Message 14962069 The market is also ignoring Inmet's 100% interest in IZOK LAKE, perhaps the best undeveloped base metal deposits in North America, just when consideration is being given to the possible provision of infrastructure. Of course a mine here would be years away.

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