This is a good post from a *newbie* over at IHUB
concerning *potential* valuations on AURC:
Some interesting Valuation Comparisons.....
I came across a survey on the web of 60 Gold Stocks, carried out Gold Stock Analysts (dated February 2006). These companies ranged in market cap from $50 million to $26 billion (Newmont).
An assessment was carried out find the relationship of Proven and Probable Gold Reserves (P/P)to Market Cap. Based on the gold price at that time of $562/oz, it was found that the average market cap for these gold companies could be calculated by multiplying the P/P gold reserves in Oz by $213.00.
i.e A company with P/P of 5 million Oz/ Gold should have a market cap of $1.065 billion, if fairly valued by the market, based on this average $/Oz figure of $213.00.
With the increase in Gold price to $650.00 this figure is now c. $245.00. This benchmark figure can be used to assess if a company is overvalued or undervalued in relation to the average price per Oz. Basically, it gives a simple guideline as to what the current market cap should be if 'fairly' priced by the market (all else being equal)
I looked for comaparable companies in the survey, with similar P/P reserves as AURC.
Agnico Eagle (AEM-NYSE)
P/P= 7.9 m/ oz
O/S= 106.7 million
Current Price= $36.75
Market Cap = $3.92 billion
Market Cap per Oz of P/P Reserves = $496.20/Oz (suggests gold reserves are over-valued when compared to the market average)
Eldorado (EGO-ASE)
P/P = 7.09 m/oz
O/S= 301.9 million
Current Price= $5.24
Market Cap = $1.58 billion
Market Cap per Oz of P/P Reserves = $222.85/Oz (suggests gold reserves are near to fair value when compared to the market average)
Randgold (GOLD- NASD)
P/P = 6.58 m/oz
O/S = 68 million
Current Price= $ 24.24
Market Cap = $1.64 billion
Market Cap per Oz of P/P Reserves = $249.24/Oz
suggests gold reserves are near to fair value when compared to the market average)
Then carrying out the same exercise with AURC:
AURC
P/P = 7.1 m/oz
O/S = 113.4 million
Current Price= $ 0.33
Market Cap = $37.4 million
Market Cap per Oz of P/P Reserves = $5.27/Oz (No comment!!!)
Based on current Gold prices and an average of $245.00/ Oz of P/P reserves the market cap should be valued at:
Market Cap = $1.74 billion
Share Price= &15.34
(Note: The above calculation does not take account of the silver and other reserves held by AURC)
Obviously, there other factors which need to be considered as well in such a valuation such as company financials, trading history, management, exchange etc. and I haven't gone into any DD of each of the above mentioned comparative examples to see if there are other factors that may affect their valuations.....but my conclusion based on this evidence is this must be one of, if not the most, undervalued gold company out there.... |
