I agree on your discount theory regarding opportunity risks (stock market vs. bonds), but what kind of discount are you applying to country risk ?

Why 8% for "good jurisdictions" and 15% for "crap" ? Why not 5% and 20% respectively ?

Next commodity price risk: your example is a perfect one AGAINST your discount theory, because what discount is applying TODAY if I don´t know whether there will be a new mine in China in 2013, or because of the Chinese growth, demand will be outpacing supply by then. I don´t know TODAY, if the price of zinc will be higher or lower in 2013.

So, am I discounting it, and if so, by how much ?

The same with the other risks you mentioned (inflation, management etc.).

As I said before : too many variables and uncertainties !

That´s why an industry average of price per ounces in the ground TODAY (assuming market is discounting risks in the share price / buy-out price properly) is giving you the best formula to calculate a companies valuation TODAY, IMHO !

FANTOMAS