Hope and prayer.

HIGH-GRADE NI-CU-PT-PD-ZN-CR-AU-V-TI DISCOVERIES IN THE "RING OF FIRE"

NI 43-101 Update (September 2012): 11.1 Mt @ 1.68% Ni, 0.87% Cu, 0.89 gpt Pt and 3.09 gpt Pd and 0.18 gpt Au (Proven & Probable Reserves) / 8.9 Mt @ 1.10% Ni, 1.14% Cu, 1.16 gpt Pt and 3.49 gpt Pd and 0.30 gpt Au (Inferred Resource)

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Edgy

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Hope and prayer.

posted on Dec 16, 2009 10:17AM

I still see some posters using gross in ground assets as current value, in other words, taking the metal quantity multiplying by current metal price and then dividing by shares outstanding and implying that should be the share price.

Few things are further from the truth.

When you do that you are using the in ground metal as if it was excavated, processed and sold, well it is not and there is a huge discount for it not being so.

To post such without qualification is a disservice to the uninformed potential shareholders, who in turn will often buy and complain about the huge under valuation of the stock.

To get the metal out of the ground takes time so the price you think you should get is time discounted to bring it into the present. Further when it is processed and sold about half of the value will immediately go into paying for royalties and taxes so immediately only about half will see the company's hands. The company in turn has to pay the operating expenses which can be as much as half again of the remaining cash.
Just remember that the cash that remains is in the future and not during the present when you are doing your valuation, so that dollar is again devalued by the expected financing cost ( interest ).

Lastly but often overlooked is the actual metal in the ground.
You may believe there is a billion ounces, or pounds in the ground but until it is supported by solid evidence it is just your assumption and it has no real value.
The market applies a huge discount on assumptions.

If spectacular news comes out the share price spikes up but that is the speculators gambling that the news release represents a valuable asset. It is not always so and soon after the share price saggs. The find needs verification to keep the share price up.
So do not tell me that the share price should be 20 or 30 dollars when today it is only a dollar. There are reasons for the latter and the former is just a gambler's wish.

Yes I do gamble and often with the stocks but there is gambling and there is the stock market. Know the difference. Gambling on the stocks should be informed and by informed I mean you should be able to judge what is relevant and what is pie in the sky.