Post by
cbew on Apr 14, 2023 12:51pm
Why we should be at $3 cad now
Here's a quick back of the napkin cal. of why the sp is so undervalued and why we should be closer to $3 Cad right now. According to the PEA the base case NPV of Cordero mine is stated to be 1.2B US. The base case assumption used Ag prices of $22/oz, $1600 Au/oz, $1.00/lb Pb and $1.2/lb Zn. Or about $22/oz Ag. eq for simplicity. As of today these prices are much higher with Ag and Au having surged approx. 15% from their base case prices. If we use the NPV of +15% from the PEA study we get a NPV of 1.797B or lets just say $1.8B US. Normally a developing mine at this stage can be valued at anywhere from 50% to 80% depending on the project and economics.
A highly profitable mine like Cordero with one of the lowest cost curves ( accoding to the PEA ) and IRR of over 35% should be valued closer to the high end 75 - 80% of NPV at this stage. But let's just be conservative and use 50% val. That will give us 1.8B/2 or 900M US. Divide that by the outstanding shares ( lets use 400lM with the latest dilution for simplicity gives us $2.35 US /share or about $3/ sh Cad. NOW you can see why some big players are getting into this financing and they are willing to do it without warrants attached. Grossly undervalued imho. If we get a sustained surge in PM prices this will take off Big IMHO.
Comment by
cbew on Apr 14, 2023 2:54pm
Small correction - should be PF not PEA. We are at a prefeasibility level study not the old PEA. My bad!
Comment by
MoneyK on Apr 14, 2023 6:38pm
Not sure that using a 5% is very conservative. Less than 50% of revenues coming from precious metal. I would use 8% to stay conservative. Per the Lasonde curve, more value should come once permits are issued and construction begins and nears completion. Until then... maybe a silver boom could get it higher... MoneyK