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Gold/Mining/Energy : Global Platinum & Gold (GPGI)

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To: Bob Walsh who wrote (9998)	4/6/1999 10:15:00 PM
From: Scott Wheeler	Read Replies (3) of 14226

<< You could easily have a profit per share of greater than $2 which at a P/E ratio of 8 would give you a share price of $16. >> Bob, I agree with just about everything you've stated, except this. I appreciate your caution and conservatism, but as I understand it, typical PE ratios can be considered too low to use in precious metals mining company valuations for these reasons: 1) mining stocks are not as vulnerable as most businesses, because precious metals commodity price fluctuations are much less than those for other commodities, 2) that [proven] reserves are usually considered to be an important aspect of valuation, thus must be added to cash flow and profit considerations in determining corporate valuations, 3) that Au/Pt companies don't need to compete and market their products the way other industries do (you don't get stuck with unwanted inventories!). I am not expert in this area and will defer those with greater knowledge in this regard. However, I have heard that PEs as high as 50 or better are often accepted, if production is reliable and reasonable in cost.

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