Perspective on $100.
posted on
Feb 10, 2008 06:04PM
Big numbers often elude people, so lets build a picture of what factors might bring that about. $100 per share implies a market cap of about $12 billion. But the resource alone (NOT) is only a part of what is needed in the balance sheet of an operating company to actually turn the resource into a cash flow. The non resource capital investment required to exploit the (NOT) resource will depend on the processes used and estimated mine life. Therefore, the bigger the overall resource, the better the economics, and the more valuable the resource component relative to the total . The bottom line is that if significant resources are also discovered by non- NOT juniors, the better relative valuation for NOT's resource, whatever its 43-101's ultimately indicate. Resource prices, processing costs, and economies of scale (the ability to combine junior finds into one mine) will all be major factors in determining what NOT's share of the pie is worth. LETS HOPE THAT NOT TURNS OUT TO HAVE ONLY A SHARE OF A MUCH BIGGER PIE, because that will increase NOT's value all other things even. So, while $100 per share is "entirely possible" the factors that will begin to define its PROBABILITY are only beginning to evolve, and may require substantial drilling investments by that will take several years. A more reasonable short term wish list is that NOT hits on DE2 and beyond; that other McF plays also strike big; and that resource prices remain strong. If all those happen , $100 will begin to come into the realm of some degree of probability as opposed to its current status of"wild speculation".