Bhang Inc BHNGF

Bought more gems

[loparn]

at this really big pullback. GEM is real cheap now : "The Elliot Lake area produced over 270 million pounds of uranium between 1955 and 1989. Some infrastructure such as power lines and access roads are there. The most effective mining method is not decided yet, and my calculation stipulates that they can reduce costs to a reasonable level. There are rare earth oxides found in the property, and therefore there is a potential for cost reducing credits from rare earth oxides production. I assume a USD 80 long term average uranium price, production 2-2.5 million pound per year from 2011, a further stock dilution to 100 million fully diluted shares for capital costs not debt financed for the uranium project, taxes 35 %, p/e 10 and USD = 1.11 CAD. Production costs I assume will be reduced to an average of USD 45-55/lb uranium after the new higher grade uranium in the BCB. The 2011 earnings after tax of the uranium project per share then would be CAD (2 to 2.5) x (80-(45 to 55)) x 1.1 x 0.65/100 = CAD 0.358-0.626. Applying a p/e 10 results in a CAD 3.58-6.26 2011 potential. The 2007 value would be CAD 1.46-2.56, calculated with a yearly 25 % interest rate, very high due to the high risk. The 25 % interest rate corresponds to a total 40 % risk discount compared to a calculation with a 10 % interest rate. It could be interpretated as that the expected value of the 2011 potential 2-2.5 million pounds uranium production is 40 % lower or just 1.2-1.5 million pounds per year in a simplified probabalistic point of view. On top of this Pele Mountain Resources has many other canadian exploration projects dealing with gold, diamonds and base metals, with some of the projects in form of joint ventures. The total expected value now of all those other projects together could be significant. But as of May 2007 Pele Mountain Resources has decided to separate their uranium project from the other parts implying that the true company value most likely will be easier to understand for the stock market. Thus, to get a price target for 2007 you should add the expected net present value of REO credits and the value of the gold, diamonds and base metals exploration projects to the calculated CAD 1.46-2.56 "