<< Very few zinc projects coming to production in the next 3 years, and this one should hit production right around when LME zinc inventories should be approaching zero and the price of zinc should be ramping up. Very small zinc project, but tiny market cap, with operating cash flow from zinc that could be higher than the current market cap when they start producing. >>
Per today's press release, they have 104,838,584 shares outstanding:
acadiangold.ca
The stock was at a new high of .79 when I posted, but continued higher to close at .81. At the close, by my math the market cap is just over $74 million US:
104,838,584 x .81 = 84,919,253.04 CAD x .8722 = $74,066,572.50 US
Even fully diluted at the closing price, I think the market cap is under $90 million US.
When I said "operating cash flow from zinc that could be higher than the current market cap," I meant if zinc ramped up in response to the LME inventory depletion and if lead stayed strong. Some very smart people have said zinc will go over $3 on this ramp up, but let's say in such a scenario they get $2.50/lb. (net smelter return) for their zinc and .75/lb. for their lead:
Per the feasibility study, they would be producing 39,800,000 pounds of zinc and 16,500,00 pounds of lead:
39,800,000 lbs. of zinc x $2.50/lb. = $99,500,000
16,500,000 lbs. of lead x .75/lb. = $12,375,000
Their revenue would be $111,875,000.
The royalties paid to the Nova Scotia Government would be 2% of the net smelter revenues, or $2,237,500.
Subtracting these royalties and the annual direct operating costs of $16,597,000 from the revenue to calculate operating cash flow, as done in Table 43 on page 132 of the full feasibility study (available as a “Technical Report” on Sedar.com), produces the following results:
Revenue $111,875,000
Royalties Paid (2,237,500)
Direct Operating Costs (16,597,000)
Operating Cash Flow = $93,040,500
To get net income, you’d have to subtract overhead costs, taxes, and interest, but the operating cash flow of over $93 million in this scenario would be higher than the current market cap.
<< Market cap is $95M...small but not tiny! Not sure I see how they can have cash flow bigger than that. >>
If you’re right about a $95 million market cap (can you please show how that’s right?), add 6 cents to the zinc price and that’s how you have operating cash flow bigger than $95 million. For that kind of cash flow from a zinc producer that had most of its current stock price as purely a gold junior just a few months ago, even your figure is a tiny market cap in my book.
By no means am I saying it’s a sure thing zinc will be over $2.50/lb., but I stick to my statement that it could happen as the LME zinc inventories approach zero. |
