Zeev: I enjoy fiddling around with spreadsheets, so I built a cash flow model using your assumptions as you stated them. I came up with a valuation of $9.21 assuming 20 million shares and a discount rate of 10%. At 15% discount rate, the valuation is $7.29 per share.
A couple of notes: (1) this valuation is for the 500,000 tons of stockpiled ore only. After the 500,000 tons is used up, I ended the analysis. Based on your assumption of doubling production every 3 months, I calculated they would get to 200 tons per day by 2000, and exhaust the 500,000 ton stockpile by 2006. (2) I calculated they currently can process 1.2 tons per day of head ore. This is based on GPGI's statement that they can produce 4,300 lbs. or dore per month, plus the previous posts which indicated that one ton of ore produces 120 lbs. of dore.
Comment: At 1.2 tons per day, GPGI would generate $64,500 per month of revenue (assuming 30 days/month of production and $1,800 per ton). So far, GPGI has stated they have received checks totalling $15,000 for several months of production. Therefore, while GPGI may have the capacity to produce 4,300 lbs. of dore per month, it does not appear that their refiners have the capacity to refine this much material as of yet. |
