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Gold/Mining/Energy : Fenway Resources Ltd. (FWY@V)
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To: John A Weisgerber who wrote (6)11/21/1996 7:38:00 AM
From: donald sew   of 135
 
John,

I have done a fundamental analysis, and I did use a PE of 10. I calculated $45.00 for the stock once the plant is functional at 2 million tons per year. Of course its dependent on other factors such as the price of cement, etc. To be conservative I discounted the $45.00 figure by a random 20% which comes out to $36.00/share at the beginning of production.

Here's my calculation:
Profit margin per ton:....$50.00
Tons/year (at start):.....2 million tons
# of shares:..............22 million
P/E ratio used:...........10

1) $50 x 2,000,000 = 100,000,000
2) $100,000,000 / 22,000,000(shares) = $4.55 earnings/share
3) $4.55 x 10(P/E)= $45.50/share

If I miscalculated anything - please tell me. Remember- such calculation is based on only 2 million tons. It is my understanding that without major expansion - the plant has the capacity to actually handle 5-6 million tons soon after production starts.

If any of my beliefs are incorrect please advise.

Seeya
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