Sunshine Refinery Very ProfitableFCO.s Cold Creek Hydrometalurigcal Complex in the Silver Valley of Idaho is a fully permitted facility which includes three plants in one......an acid pressure leach plant that will be retrofitted to process cobalt concentrate.......a copper refining plant to process secondary copper from the ICP.......and the fully operational Sunshine Precious Metal Refinery for custom refining high purity silver and gold dores.
The Sunshine PM plant continues to escalate production.
In the first 6 months of 2011, the Sunshine mill had gross revenues of $7.95 million and an operating margin of $2.1 million or about 26 % of gross sales.
G $ A expenses were $1.1 million for the first 6 months which means that, if the ICP did not proceed, FOC's Sunshine refinery would be able to process about $25 million per year in refined silver and gold dores which would generate about $6.5 million in operating profit. At a valuation multiple of 10 X, FCO's Sunshine Refinery profits values FCO at about $65 million or about
.72 per share.
This is several times more than the approx $2.3 million for annual G & A operatinf costs which means that FCO is/will be a very profitable operation even without the ICP moving forward to production in the near future.
Note also that in addition to $55 million in cash, FCO had $4.6 million in silver and gold inventory at the end of the last quarter and also had $3.4 million in prepaid expenses which were eventually returned to FCO subsequent to the quarter.
It also had several millions in reclamation bonds that will be returned should the ICP not proceed.
Given the silver inventory at the end of Q2, FCO will likley gross over $6 million in refining revenues for Q3 which will add to the net profits earned in the first half of the year.
Silver Valley is undergoing a major silver mining renaissance, with the recent increase in the price of silver.
Many of the former mines are being rehabilitated and silver production is once again the largest in the US.............so there are lots of demand for the Sunshine Refinery facility which is readily expandable.
Putting all of this togather with net cash reserves in excess of $55 million, it becomes evident that FCO has a fair value well above $1.25 per share on the assets and profits of the Sunshine Refinery alone.