To All. I have recently completed reviewing information from GPGI. The quantity of upgraded ore is 600,000 tons. Each ton contains at least $3000 of recoverable precious metals. Thus without counting the 15,000,000 tons of of precious metal bearing ores (not yet upgraded) and additional available properties, we can put a value of $1,800,000,000 on that single pile.
If we assume that over the next three years GPGI will be operating at just 100 tons/day we obtain annual sales of $90,000,000. Their gross margins should be well in excess of 50% (since they need not mine nor size reduce the ore, but go directly to their selected extraction process), and they are operating with an extremely low overhead. Lets take out another 20% for royalties and depreciation on future equipment for expanding the operations to 1000 tons/day, and setting up the infrastructure for future evaluation and mining of the site that contains the 15,000,000 tons of raw ores, and we get $27,000,000 in pretax profits or about $2.45 per share. Let's cut this in half for taxes other expenses and we get a very conservative earning estimate of $1.20 (very conservative, since they must have a pile of carryforward losses from the last ten years of development). Since GPGI profits will grow at least at 30% per year over the next five years, a fair and conservative PE of 20 yield a stock value of $24/share.
This evaluation assumes no value for "assets in the ground" and options on the old Ore Grande and Weaver Creek sites, and of course no value on the 15,000,000 tons of ores at the Hassayampa Project's site.
I would welcome any comments from the experts on this thread as to the valuation I have tried to calculate. Personally, I think that within 5 years (once the production rate is at 1000 tons/day), the valuation could increase another five fold (once again conservative assumptions, since by then the costs might be higher since they will need to add the step of upgrading the ores).
Best regards to all. Hope you survived today's bloodbath. Personally, I am down a solid 2% on the day-Ouch!
Zeev |
