Speaking of refining things, I happened to be looking at Post #8736 in which I did some comparing of Stillwater (SWC) to NAXOS. I noticed I had a little math error. I added 1 oz of Pt and 1 oz of Pd and came up w/ 1 oz of PGM metals.
The good news is this time I used the calculator and I've reposted it below and, to keep the math the same, proposed a 10,000 TPD plant instead of a 20,000 TPD plant. Results end up the same - stock still comes out to be a major home run - $1000 share- all without the gold factored in. Hope this isn't considered hype - there are a few unstated assumptions in here, such as homogeneity and that you can recover what you assay, but other than that, seems objective to me.
Thought some might find this interesting. Stillwater (SWC), the biggest
US producer of PT and PD, just announced results a day or so ago.
biz.yahoo.com
Per the report, they have 31.5 Million tons of material w/0.80
ozs./metal per ton (3.2 palladium to 1.0 platinum ratio) or 23.4 million
ozs. of reserves. Presently producing 450,000 - 500,000 ounces of metal
per year (2000 TPD plant), thus 40 years + on the life of the mine.
Cash cost per oz averaged $174 for 1997 but the company said they expect
them to drop to $140 - $160 next year.
One post on the SI SWC board states that an analyst from SSB (Solomon
Smith Barney) has a target price of $50 on them in 12 months. However, 2
analysts at First Call show earnings estimates of $.25 for FY 98after a
loss this year. Stock presently is at about 19 7/8.
I thought I'd try to compare their PT/PD numbers to NAXOS' PT/PD (all
other metals can be viewed as a bonus!) to see what that might show.
Assuming 1 oz each of PT and PD - (see August 28, 1997 release - #s
below)
Gold (oz/Ton) Platinum(oz/Ton) Palladium (oz/Ton) Gold Equivalent
(Oz/Ton)
Surface 5 acre #1 Disturbance area 0.779 1.259 1.378 3.135
and 2B tons of material, NAXOS would have 4 Billion ozs of reserves, or
170 times as much as SWC's 23.4 Million ozs. If NAXOS had a 10,000 TDP
plant (5X bigger than SWC's present capacity), they could produce 2.5
times more PT/PD year ((2.0 oz per ton/.8oz per ton) = 2.5 more metal
per ton x 5 times more throughput = 25). A total of say, 5 Million
ozs/yr., since SWC produces about 450 -500,000/yr. Then, based on Tom Frederick's recent post, I'm assuming a cash
cost of, conservatively, $30/oz, or 20% of SWC's expected 98 costs of
$140 to $160. If NAXOS produces 5 Million ozs. with an extra $110 to
$130 dollars of profit per ozs., doesn't that make us about $550 - $650
Million more per year than SWC? Divided by, say, conservatively, 50
Million shares, we have earnings of $11 - $13 share or about 44 to 52
time more than SWC's projected $.25 in 98.
Our mine life is much longer - 800 years. (4B ozs of reserves/5M ozs/yr
= 800). But I'm not adding in for that. Our gold, etc. is very valuable,
but I'm not adding in for that, either. I'm assuming PT/PD prices remain
about the same (we aren't totally flooding the market in this scenario,
are we?). So, obviously very roughly, aren't we 44 to 52 times more
valuable than SWC (present price-almost $20) if we were to build this
size plant? Doesn't that make NAXOS a potential $880 -1000 stock on
PT/PD alone? What have I missed? Too optimistic? Cutting the amount of
material in half doesn't change much, just the life of the mine and the
valuation associated with . Cutting the recovery rate in half (.5 ozs
each of PT and PD) still says we have a $440 - $500 stock and we've
probably impacted the market price for these metals less than in the
original assumption. |
