U.B. Green (flattery will get you everything <g>) and all threaders. I am as confused as everyone else here. Before I go through another attempt at "valuation" of the company, we should all be aware that there must be some communication problem in the tiangle "Hassayampa (Twifford/Palmer), Salt Lake (D.J.) and Fishbaine", otherwise we would know much better what is the value of goodies in a ton of beneficiated head ore. We used to think that we had some $2500 worth of goodies per ton, now it appears to be closer to $1500, but that could very well be due to gold having 30% of its value shaved off in the last 15 months.
I know that I have measured (X-ray fluorescence) 110 PPM of gold in a sample I received from the beneficiated heap (no COC, thus this statement should be viewed as written only) from Palmer. This comes to pretty close to 3 oz/ton. So any figure between $1500 to $2000 could indeed be reasonable if the other PM are there.
I can accept taking the 500,000 tons and using $180 in current value of future production as a rational estimate (that would assume that the whole heap would be finished in about 12 years or at a rate of about 40,000 tons per year or close to 200 tons per day, and we are quite far from that at 5000 # day). On this basis the current value of the company should be about $90 MM and at 22.5 MM shares, a fair value just based on the beneficiated eap could be $4/share. Everything else (the additional 15 million tons of raw ore at Hassayampa and 100 million tons of ore at WC and Oro Grande) is toping on the cake which eventually will cause the price to go above that value.
Sop, why I am not rushing to buy at at 1.25. Well, first, the price range of $.875 to $1.25 is the price at which I think this stock should be bought (ZIDDI followers, go and sell your stock <VBG>). I am in no rush because the technical picture of this stock indicates to me that the market has grave doubts in management's ability to get to a production rate of 200 tons/day in the near future. Furthermore, to get to such production rate, the company will have to raise some money for equipment which may dilute current share holders, unless something happen to cause the an erumpent price to be demonstrated.
As usual, when the fundamentals (which appear quite good) and the technical (which do not) are not in agreement, it is a good idea to step back and find out why the two are not in better concordance.
Zeev |
