My CZN price study...WOW!Canadian Zinc (CZN Toronto exchange) PRICE EXPECTATION MADE SIMPLE
Another very undervalued metals/commodity play, looking to make the Hunt brothers
fully infrastructured mine (that never actually made it into production), a producer.
My best attempt to get an IDEA as to what price level of this stock could be
in the future using data available at this present time.
These calculations use different price levels of the underlying silver, zinc,
lead and copper production expected from CZN. There is total number of
shares outstanding of 38,000,000 as of this date. I will adjust these
calculations and republish this when new information is available.
A reasonable expected production of CZN after the mine is up and running
at full tilt will be approximately as follows.
· SILVER = 9 million ounces per year
· ZINC = 100,000,000 pounds/year
· LEAD = 200,000,000 pounds/year
· COPPER = 45,000,000 pounds/year
CZN has certain cost expectations of their production, but I am going to use
these as a guide and try to break it down further into each of the 4 categories.
I will be using my best judgment to arrive at what the cost of production is
for each of the 4 metals. This will allow me to vary the price of the metals
independently and compare the profit benefits of each. I am going to guess silver
costs to be 3.50 dollars per ounce, zinc costs at .19 dollars per ounce,
lead costs at .20 dollars per ounce and copper costs at .50 cents per pound. I will
then arrive at a cumulative profit number for total production of all the metals, and multiply this by .70 to allow for the corporate tax burden of CZN.
First lets take a look at projected CZN profits with the metals priced as they are today:
· SILVER at 5 dollars/ounce
· ZINC at .44 dollars/pound
· LEAD at .22 dollars/pound
· COPPER at .84 dollars/pound
silver profit would equal 13,500,000 (dollars).
zinc profit = 10,000,000
lead profit = 4,000,000
copper = 11,000,000 (dollars)
So the total profit at these levels is 38,500,000. We then divide this by the
38,000,000 shares and get 101 cents per share of earnings before taxes.
1.01 x .70 = .71 cents of profit after taxes.
p/e ratio of 14, historically normalized ratio = 9.94 dollars per share
p/e ratio of 35, comparable to today's stock market = 24.85 dollars per share
p/e ratio of 100, comparable to dot.com mania level = 71.00 dollars per share
next lets take a look at CZN with numbers that represent where I think the metals will be within a couple of years.
· SILVER at 10 dollars/ounce
· ZINC at .80 dollars/pound
· LEAD at .30 dollars/pound
· COPPER at 1.10 dollars/pound
silver profit would equal 58,500,000.
zinc profit = 61,000,000
lead profit = 20,000,000
copper = 27,000,000
So the total profit at these levels is 166,500,000. We then divide this by the
38,000,000 shares and get 4.38 dollars per share of earnings before taxes.
4.38 x .70 = 3.07 dollars of profit after taxes.
p/e ratio of 14, historically normalized ratio = 61.32 dollars per share
p/e ratio of 35, comparable to today's stock market = 153.30 dollars per share
p/e ratio of 100, comparable to dot.com mania level = 438.00 dollars per share
finally, lets take a look at CZN with the metals at very high levels
compared to today's price, but levels I believe will be achieved at some point
in this precious metal/commodity bull market before we are done. In fact, these numbers may be surpassed by a long ways!!!
· SILVER at 50 dollars/ounce
· ZINC at 1.25 dollars/pound
· LEAD at .50 dollars/pound
· COPPER at 3.00 dollars/pound
silver profit would equal 418,500,000.
zinc profit = 106,000,000
lead profit = 60,000,000
copper = 112,500,000
So the total profit at these levels is 697,000,000. We then divide this by the
38,000,000 shares and get 18.34 dollars per share of earnings before taxes.
18.34 x .70 = 12.84 dollars of profit after taxes.
p/e ratio of 14, historically normalized ratio = 179.50 dollars per share
p/e ratio of 35, comparable to today's stock market = 641.9 dollars per share
p/e ratio of 100, comparable to dot.com mania level = 1284.00 dollars per share
These number surely confirm that CZN is undervalued even at today’s metal
prices. Remember, this is a very forward looking projection and chances are there
will be more shares issued and change the divisor, but this will not change the fact
that this stock is an extremely leveraged play. In fact, if you were to only value this stock
on the mine, mill, and land value alone (not the minerals in the land), you are talking about 150,000,000 dollars in equity. This alone would price the stock at 4 dollars/share
and here we are sitting at less than .50 cents at the time of this writing. Opportunities like this do not come around very often and the risk in this stock is in whether production can actually commence unimpaired and if these production numbers can be achieved. If they are, then look out above!
My disclaimer... not intended for investment advice, I’m not a professional investment thief, I do own shares in Candian Zinc and this information is
based on my honest opinion only, bla bla bla, etc.
feel free to pass this info on if you feel it is worthwhile!
m2trains/motowngold, etc.