So what happened to your $5 target for HRG in this gold price range...when things looked much worse, problem with the mill, less resources...?
Mar 20, 2009: If Severstal does the right thing, we could quickly be at 1 dollar or higher. (Price
.17)
https://www.stockhouse.com/Bullboards/MessageDetail.aspx?s=HRG&t=LIST&m=26363022&l=0&pd=0&r=0
You have to understand that the company will produce between 250-300k ounces a year, at 500 cost. At 1000 gold, that is ebitda of 125-150 mil dollars a year.
Under normal circumstances, ev/ebitda in these situations is 10, so HRG fair value is 10x 125=1.25 bil
1.25 bil divided by 590 mil shares equals 2.11
2.11 is the fair price IF, Severstal plays ball and keeps it public.
The risk here is that Severstal tries to buy us out. The least they can offer is .20, as that is what they already payed.
So there is NO downside in the longterm.
Short term anything can happen as you know. Longterm I have a 2 dollar tgt at 950 gold average.
Now if gold goes to 1500 which is possible and this thing stays public, we are talking 350 mil ebitda, at 10 ev/ebitda, 5.93 per share.
This is simple math. Upside is monstrous here, downside limited. I say let the penny tradersmake their pennies.
I added yesterday at .165 some shares and still have my cost below .16.
https://www.stockhouse.com/Bullboards/MessageDetail.aspx?s=HRG&t=LIST&m=26363030&l=0&pd=0&r=0
prouditalian
2
3/27/2009 7:16:59 AM | | 323 reads | Post #26363030
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got slightly carried away and did not calculate the debt. Sorry. My target still comes to over 5 dollars however. I hope I made my point. I am becoming much more bullish and will likely add if we can break .20 today and stay there. I have noproblems about averaging up, and much prefer that to averaging down.