2006 Calculations and beyond...After completing my DD on VVC I thought you may want to know a quick estimate of profitability based on the gold mine in production and the antimony mine. I was even a little suprised when i crunched the numbers.
Here it is:
CHINA GOLD MINE:
VVC owns 70% interest in the China gold mine which in its first quarter had a net profit of approx. $500,000 ebita. They are increasing the capacity and production going forward, so an estimate of $3-4,000,000 ebita (of which they get 70% of) would result in a year end profit of approximately $2-3,000,000. This is a very reasonable estimate.
ANTIMONY MINE (assuming brought back into production):
VVC owns 27.5% interest which may be increased if VVC helps financially with the restart of the mine. So lets be modest and say 30% ownership. Based on $2600/tonne would result in a net profit of just over $8,000,000 or 37% internal rate of return. Working this backwords equates into revenues of $22,000,000/yr. Then now looking at the fact that Antimony has doubled in price to just over $5000 (say $5200 for argument sake), this would mean that the revenue would instead be $44,000,000/year and net profit is $30,000,000/yr based on the current spot price of antimony. Since vvc owns 30% of this, this would mean potentially $9,000,000 in net profits from the antimony mine.
SHARE PRICE and Earnings per share:
Therefore the earnings of VVC could potentially be $11-12,000,000 if the china gold mine continues to increase capacity (only modestly even) and that they reopen the antimony mine (which has almost all of its facilities ready and intact).
-therefore based on 38,000,000shares outstanding currently, VVC would have earnings of 32cents/share. If you base this on a typical producing mining company currently you would see a Price over Earnings (PE) ratio of atleast 10 and possibly upwards of 30. Factoring that in that would mean that VVC would be trading at $3.20-$9.60/share while it currently trades at .44cents.
Obviously this is a little far fetched as they have not re-opened the mine as of yet, however, when it comes to huge hidden value... it is almost to the point of tangible, something so many other bloated exploration stocks cant even boast.
Good investing
Bdussy