Well the revenue will be front end loaded early on., with around
2 yrs or 3 yrs of production., so I would expect to see cash flows
robust in the beginning. Just a simple method might be comparing
PE of other S.Afrcian producers., in the NWT maybe a PE of 15 to
20., S.Africa probably 7 to 10. If one assumed PE of say 7 on the
low side., it would be a 12.OO C stock. You can move up or down
the gradient depending what the markets views as potential risk.,
ease of extraction., confidence in the deposit., I would say., seeing
the deposit is small may temper the overall potential in price appreciation., but that being said., it could attain a price of 15.00C
based on earning projections. So one should look at comparitive
companies., but they are few., other than Ashton and DeBeers.,
which neither offer very good models. The gems are large., and
the margins will be very good., some analysts will project higher and
some lower., but the safest bet is to set a PE based on earnings (1.50C)
somewhere between 7 to 10., and it will keep one out of trouble.
So I suspect the stock should move to around 8.00C or there abouts.,
and as earnings start., appreciation will be tied to cash flow and
PE ratios
I suspect as the analysts start following the company more closely
those targets will be refined either up or down based on the progression of the company there and elsewhere.
Sincerely
George J. Tromp |
