RE: Value going forward ?quinlash,
You'll find below the text I posted here on 18 August regarding my estimates for NML from a short and long time perspective.
Any constructive comments are welcome.
Hope this helps.
Benvest
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On another note, I took a look at Jennings Capital latest "Rock Talk" edition today and I compared valuations for Iron ore companies in order to have an idea where NML share price could go if things get going. As a producer, CLM is currently valued at $355 / t of annual production. The target Jennings has for CLM implies that CLM would be valued at $525 / t of annual production.
For DSO:
800 k tonnes x 355 = $ 284 millions / 140 million shares = $2.02 / share
800 k tonnes x 525 = $ 420 millions / 140 million shares = $3 / share
LabMag / KeyMag (assuming NML share of the production would be 20% of 22 million tonnes = 4.4 million tonnes. Add to that 800k tonnes from DSO and you get 5.2 million tonnes for NML's share)
5.2 million tonnes x 355 = $ 1.95 billion / 140 million shares = $13.94 / share
5.2 million tonnes x 525 = $ 2.73 billion / 140 million shares = $19.50 / share
The problem with the LabMag / Keymag valuation is that it is to far in the future, but it still shows the potential. If you believe Iron ore prices are going to be higher at that time, you can increase the target price accordingly.
To have a shorter term evaluation, using an optimistic scenario that DSO will get approved in September and KeyMag / LabMag in December, we can use a valuation of $50 / t of anticipated annual production for KeyMag/LabMag.
4.4 million tonnes x $50 = $ 220 million / 140 million shares = $1.57 / share
If you add $1.50 / share for DSO in December, we could have a share price of $3 in January 2011 if everything falls in place. This would then increase to $4.50 / $5.00 by the end of 2012 once DSO is in production. We would then have to wait for 2016 in order to see $15 - $20.
Of course, there is still a lot of risk and the share price could go substantially lower if things don't get solved with the Innus. However, those who invest at the current level will see the biggest gains once everything will get going forward. Or the biggest lost if nothing gets done down the road, which I don't expect will happen, but it's possible that the share price will go lower before getting higher.
GLTA