Facts About Imperial Metals
IPM has been one of those stocks that are undervalued. It owns
60% of Colony Pacific (15 million shares) in JV with INCO in Indonesia
which has traded as high as $9.25 for the year. It also owns 40 % of
Cathedral Gold which operates the Sterling gold Mine near Beatty,
Nevada and holds advanced exploration project in Guyana, and South
America.
IPM is financed by the giant Sumitomo Corporation (45% interest)
to mine its proven reserve of 1.1 million ounces of gold and 544 million
pounds of copper at Mount Polley near Williams Lake, B.C. Its
production is scheduled to commence in the Fall of 1997 at an annual rate
of 100,000 ounces of Au. My guesstimate for its Cu annual production is
10 million pounds.
IPM's net income for 6 months ending June 6 is $6,431,129 which is
translated to $.11 per share. The income, however, is partly due to some
investments that were sold in order to finance some other operations that
to IPM has better earning potential.
I think that IPM price of $2.07 is poised to pick up during the month
of January and February for its planned Au and Cu production at Mount
Polley. Infrastructures are partially completed.
The company's outstanding shares are 57,000,000 shares with 50 %
held by the management. There are only 27,000,000 shares floating.
Colony Pacific has only approximately 7,000,000 shares held by the
investors such as Nesbitt Burns who are heavily buying shares of Colony
Pacific. One prospective investor asked me a question, " Why is IPM not
moving up with its ownership of Colony Pacific"? Let us not forget that
Colony Pacific is in its exploratory stage and although their results of their
assays were very promising with Au and Ag, in its property, they have not
really proven up anything yet. They need to drill more holes to be able to
prove up a quantity of mineral resources. Therefore, in paper, they do not
have anything yet and therefore it does not add any value to the price of
IPM. IPM is not going to dump their shares into the market to cause public
panic, which consequently could drive down the price of Colony Pacific
Once Colony Pacific starts producing Au, and Ag, in its property, its 60%
earnings would go to IPM. That will make IPM go up.
Let us evaluate its resources at Mount Polley, for its gold and
copper production. Its planned gold production is 100,000 ounces a year
from a proven reserve of 1.1 million ounces and copper at 10 million
pounds (my own estimate) a year from a proven reserve of 544 million
pounds . Gold production would give them a net profit of about $150 US
an ounce since they will be producing Au themselves. Their earnings on
that alone is $.36, Sumitomo gets $.16, therefore IPM gets $.20. The
current P/E ratio of IPM is 17.9. Very conservative, because IPM does
not get the same exposure as other junior caps with full regalia of
promoters, pseudo gurus and business newswriters. In short not too many
people know about IPM yet. On their copper production, my estimate of
its 10 million pounds production annually is a net profit of $.85 a pound
(market price of copper is $1.25US/lb.), therefore their earnings per share
on its Cu production is $.08. Its estimated total earnings for the year is
$.28/ share.
At P/E of 40, the price per share of IPM is $11.20. I chose 40
because this is more realistic for a gold producer and active exploration
company than with P/E of less than 20.
I will leave everything to your imagination, the stock 's worth when
earnings from Cathedral Gold, and Colony Pacific are all factored in. |
