What price could this go to?
About time to try to get a feel of the estimated PPS when the JV is firmed up.
To examine any PM stock one has to look at a baseline reference to get a feel for price-to-forward EPS multiples that make sense. Our Excelsior mine is primarily a Silver producer, not a Gold producer. Looking at a couple of Silver producers we find:
SILVER WHEATON CORP (NYSE:SLW)
Shares Outstanding: 220.23M
Float: 90.62M
Forward P/E: 19.19x
COEUR D ALENE CP (NYSE:CDE)
Shares Outstanding: 278.99M
Float: 277.82M
Forward P/E: 13.84x
NORTHERN ORION RES (AMEX:NTO)
Shares Outstanding: 152.53M
Float: 152.15M
Forward P/E: 9.70x
Examination yields a price-to-forward EPS multiple in the 3.5-7.5x range for explorers with a low float such as IPMG.
Re-doing the numbers with those multiples and today's gold and silver prices yields:
Assumptions
1. The property we are discussing is the Excelsior Mine.
2. We can recover 80% of the avalable gold and silver.
3. Production cost of $250/oz (including the environmental set aside).
4. A standard silver exploring non-producer multiple of 3.5-7.5x EPS.
Data Assumptions
12.1 million ounces of silver @ $12/oz. equals $145,200,000.
195k ounces of gold @ $615/oz. equals $119,925,000.
Gold equivalent oz
$145,200,000 / $615 = 236,098 oz
Gold + gold equivalent
195,000 + 236,098 = 431,098 oz
Recoverable amount = 80%
431,098 x .80 = 344,878 oz
Total valuation
344,878 x $615 = $212,099,970.00
Production cost
(195,000 x .8) x $250 = $39,000,000.00
Net revenue in ground
$212,099,970.00 - $39,000,000.00 = $173,099,970.00
EPS
$173,099,970.00 / 325,000,000 shares = $0.533
Gold/Silver multiple Net Valuation
Low: $0.533 x 3.5 = $1.87 per share
High: $0.533 x 7.5 = $4.00 per share
Current price valuation multiple range
Low: $1.87 / $0.009 = 208 times current price
High: $4.00 / $0.009 = 444 time current price
.....
And if Silver does go to $20/oz... I'd like to wish you all a Very Merry Christmas and Happy New Year. :-)
rrm |
