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Gold/Mining/Energy : Global Platinum & Gold (GPGI)
GPGI 24.69-1.2%3:59 PM EST
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To: Bob Walsh who wrote (4854)1/24/1998 9:41:00 PM
From: Zeev Hed  Read Replies (2) of 14226
 
Bob: Only one thing, let us forget for the time being about Twifords recovery rates, maybe these are right maybe these are not, these are certainly not reproducible on a day after day basis.

Right now, I am extremely busy with a little private entreprise I am putting together, so I will not be able to put together a cash flow analysis and value the company based on its discounted future cash flow. But if someone is ready to do that, a model could use the following parameters:

Strat with current production rate and double it every three months until you get to 200 tons per day. Assume that the cost of extraction goes from $1000/ton at current rates and decrease to $500/ton at $200 tons per day. Take an SG&A value going form their current burn rate (probably 80% of sales at the initial production rate) until it reaches a value of 5% of sales at 200 tons/day (that might even be high). I would also lob out some 5% of sales for various royalties to the original land owners I have no idea if this is indeed the case or whether these owners simply got stock and that is it). AAssumes standard tax rates of 45%. And build a spread sheet. Then you take the earnings and discount these 10% per year and you get the current fair valuation. Try also 12% and 15% since some rational people actually use models for valuations that includes discounting at 3 times the prevailing "secure" long term rates for "risky propositions".

Zeev
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