Richard, I am no expert at valuing natural resources companies, but I presume that valuation on future earning or "goodies" in the ground should converge if the "goodies" are extractable over a rational period of time (less than 20 years, since the discounted value of any dollar earned 20 years hence is infinitisimal). We have already discussed the irrationality of assuming that IPMCF will flood the market with gold, and "presumed" values in the gound all extracted over the next 20 years will indeed results in such flooding. I have therefore taken the data available and built, what I believe is a rational earning model once a 10,000 ton/day facility is up and operating. If and when that happens and announcements for expansions to 50,000 ton/day surface, higher value may accrue to the stock, but today, all I can do is try to evaluate speculatively based on known plans. If they do not "demonstrate sustained production of 10,000 tons per day", they do not get the 20% above the 50% earned for demonstrating a capacity of 1000 ton/day and a resource of 300,000 ounces.
When I attempted to come up with a price target for GPGI, I did a similar thing and took only the 500,000 tons of beneficiated ore, took a much higher extraction cost amd only 100 tons day and my target price, I believe was about $10 to $20/share (and the variant included different extraction rates from the twiford 20% to the smelting of more than 80% recovery), thus anyone saying that I have a bias toward GPGI has not been checking the numbers. The goodies in the ground, I stated then, are topping on the cakes, but really not knowable until GPGI does a reasources evaluation.
Zeev |
