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Message: SP as a function of the independent variables
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Jul 31, 2009 07:01PM

OK, let's solve a problem, please check my assumptions and my math.

Basis/Assumptions: Silverado (hopefully in 2-3 years) is mining 1000 tons per day for 180 days per year, the other 180 days are for processing since you can only dig ore when the ground is frozen/hard.

Assays are indicating that the total equivalent gold+antimony could be as high as 2 Troy Ozs per ton. Assume 50% of the revenue is earnings, and $1000/Toz Au.

1000 tons/day * 180 days/year * 2 Toz (Au+Sb)/ton = 360,000 Toz/year ( of gold and antimony equivalent, normalized to gold).

This is $360,000,000 per year revenue. Or $180,000,000 per year earnings.

EPS (@1.4B shares)= $0.115/share.

If P/E is 30 (reasonable), we're near $3.5 per share share price.

Feel free to change any assumption: If we only have 1 Toz/ton equivalent Au+Sb, we are at $1.75 per share. If P/E is 15, same thing. If mine only 500 tons per day, same thing. (I'm not componding the changes here, just changing one at a time)

You get the point. Put this in a spreadsheet and play with the independent variables tons/day, days/year, Au+Sb equivalent, earnings as a % of revenue, gold value, P/E and the dependent variable (share price) is revealed. Fun to play around with these to see the possibilities.

Please correct me if I made any mistakes in logic and/or math.

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