Post by
tobinator01 on Nov 04, 2023 5:03pm
Updated Soma Valuation Estimate
Earlier I offered an opinion for a share price target for Soma based upon forward EBITDA. Disregarding the production growth from 36,000 ounces in 2023 to 47,000 ounces in 2024, I am assuming a forward annual EBITDA of C$40 million. Cash flow multipliers for gold producers runs 2 - 4, which places a market cap of Soma between C$80 to C$160 million. Debt makes the 4 multiplier not attainable, meeting guidance this year with future grown a 3X multiplier seems appropriate.
I noticed today that the 5.5 warrants were not exercised. Apparently Soma stock overloaded insiders did not feel the need to exercise them. This is where my share price estimate is adjusted. Last time I had 97 million shares outstanding after exercise. Now the shares outstanding is 91.4 million. The conservative 2X multiplier targets a share price of C$0.88. My fair value of 3X EBITDA places the new share price target of C$1.32.
Hence, eventhough SOMA's stock has doubled this year, I believe it still has another double in it possibly within the next 6 months. This assumes Gold remains flat to up.