Cash Flow
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From Kitco..... ( kitco.com )......it can be seen that , in 2005, the average small cap precious metal miner traded at 40 times net earnings and 28 times its cash flow.
Those are observed values and our current best reference indices.
Also provided are the average p/e and p/cf multiples expected in 2006.......25 times net earnings and 15 times cash flow.
It can be argued that, with gold prices higher this year and with more investor interest in gold stocks, that p/e and p/cf are more likley to be closer to the 2005 observed levels, than those predicted for 2006.
In addition, the contributing variables to variance around the mean values.......debt level, reserves, growth outlook, political stability.... are all positive for CMM, meaning that we should be accorded at least the average multiple, if not higher.
In any event, at 100,000 oz and at $325 cash cost, annual cash flow would be about $26 million , implying a fair market cap of about $400 million at 15 times casg flow, and $725 million at the observed 2005 cash flow multiple of 28.
The key catapult event to fair market cap will be CMM meeting its cash cost forecast of $325 /oz.
That value was bettered in January ( $300 /oz..see NR ) and was met for February ( info released at Gold conference ).
March is still unknown but we do know that cost mitigation measures have been ongoing since January, so meeting forecast levels for March also appear to be on track.
That means that......if we get an early release of Q1 performance numbers in April.... the catapult event could be just weeks away, which should push us more rapidly towards the fair value of $4 per share on expectd 2006 performance...
Shorts......I think that they are shorted within the box, ie the shares ( pp or warrants ) are already owned rather than being borrowed as would be if shorted against the box......ie we need not worry about them...
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stockhouse.ca;
AZK / MNG /
CMM.V / IPT.V / MUG.V
PRZFF.PK ( PRZ.V ) / BDRGF.PK ( BGL.V ) |
