Dear Thomas,

I don't want to end up in a endless discussion, but the discount factor is actually a rate (like a coupon rate or a bond yield) and has only indirectly something to do with inflation (it's not a reduction/discounting factor of some sort). And is it quite significant and 5% or 10% or 15% differs a whole lot.

The discount rate is the WACC (weighted average cost of capital) of a project if financed with debt and equity or it is just the cost of equity or debt if solely financed with equity or debt. The cost of debt and the cost of equity are (usually) both calculated via the CAPM, which depends on the risk free rate and the beta of a project or a company. In the case of VIT or a project of VIT, the beta will probably be 2 or higher wich results in a cost of equity of in and about 12-15%. And the cost of debt will definately not be the risk free rate (=3,5%), but more likely something of 5-7%. So the WACC (and thus the discount rate) of this project or of VIT will be somewhere in the range of 10-15% in the current low inflation evironment. If inflation picks up and the central banks up the current rates the the risk free rate (=10 year government bond yield) will go up and so will the cost of debt and equity and thus the WACC.

If we go to hyper infaltion then the discount rate will be (literally) off the scale... (far beyond 10%)

So bottom line... what puzzles me is that you know for sure that VIT is undervalued, but you seem to disregard (the magnitude of) discount rates, before or after tax, etc. while these issues influence the value of VIT very significantly... strange..

And by the way... calculating for additional resources that VIT may uncover seems it bit strange to me if it's not there yet. Sure there's a lot of potential... I see that too, but that's value in the eye of the beholder. Not proven in the ground value, so it should not intrinsicly be accounted for!