Zeev,
I totally disagree with your calculations and assumptions --though
I am not a proponent of a $500 IPMC.
First you assume they will need to issue 20 million shares to build the plant. This may be true with the current price. But if you assume that they are going to go to $500, they can finance the plant price at
a much higher price and thus require to issue much less shares.
You also said that the major mining companies are selling at 1 times
yearly sales. I never see that low ratio ever since I played mining stocks.
Barrick gold is at about US$26 has about 350Million shares O/S.
Their market value is about US$9 billions. Yet they will "only"
produce about 4 million oz of gold, using a $350 /oz of gold,
their yearly sales is $1.4 billion. They are selling at
6.4 times of yearly sales.
Placer Dome, with about 250 Millions shares O/S, is at US$21
has a market cap of US$5.2 billion. It is forcasting to produce
2.3 million oz of gold, using a $350 oz gold, 1997 sales will be
US$0.8 billion. So they are selling at 6.5 times of yearly sales.
So a more realistic figure is 6.5 times of yearly
sales and thus your calculation is at least 6.5 times over.
If IPMC is at $500, assuming they have 30million shares then.
Its market value is US$15 billion.
Comparing Barrick Gold's market cap of $9 billion and 4 million
oz production, it needs 6.7 million oz of gold yearly.
Comparing Placer's $5.2 billion market cap and 2.3 million oz of gold yearly, it needs 6.6 million oz of gold yearly.
If they fulfil all the contract requirement, IPMC will have 80% of
the property, not 70%. So they need
6.6/.8= 8.2 million oz of gold yearly (or 27,000 oz of gold a day).
I also did not take account of any Pt or other PGMs which some
people belive will not be less than the amount of gold there.
Anyway it will be more realistic comparing with your unheard of 220,000 oz per day production number and yes, they will need
a bigger than 10,000 tons plant.
P.S. If you use other major N. American mining company such as
Newmont etc. to calculate, you will arrive at similar numbers. |
