VEM calculationand even without counting some projects Vena Resources is very undervalued :
Vena Resources
Disclaimer : I take no responsibility whatsoever for any errors, bad conclusions, important facts missing etc that might affect my analyses and their readers in any respect, but I always try to keep the facts accurate, as well as the calculations with their usually simple mathematics. Sometimes even the companies analysed deliver false information which could be impossible to detect for me and many other interested parties. In general I trust the corporate information and use it for my analyses. The future can´t be predicted 100 % and the stock market in particular is associated with considerable risks on the company level, but also on branch-, country- and world market level, implying that each person has to take their own full responsibility of the consequences of buying this particular stock.
2007 price target CAD 2.61-3.32 + the net present value of the other projects than zinc and uranium
Calculation of the estimated present value of Vena Venture´s (VEM Toronto Venture exchange) zinc and uranium projects.There are around 91 million fully diluted shares in Vena Resources as of April 16, but I assume there will be 100 million for later capitalization.
Cash flow from zinc at 500 tons/day is estimated by the company in a scenario to be USD 17 million per year, with zinc price at USD 1.50/lb and USD = 1.1 CAD. There is a long term potential of 2000 tons/day, let say in 2010, thus generating a cash flow of USD 68 million per year, or CAD 0.75/share. With a cash flow multiple of 5 you get a CAD 3.74 per share potential in 2010. Due to uncertainties(risks) in future production level and zinc price I discount that to 2007 with a high 25 % yearly interest rate, and get a 2007 value of around CAD 1.91, i e just the zinc project could account for more than the whole market value including future stock dilution up to the assumed 100 million shares. The25 % interest rate corresponds to a 32 % risk discount compared to a calculation with a 10 % interest rate.
The Cameco joint-venture could be very roughly be assumed to result in Vena Resources owning a 30 % share of a uranium company producing 2-4 million pounds per year, let say from 2012 and forward. With an average long term uranium price 2012-2021 assumed at USD 75/lb, costs assumed at USD 25/lb, taxes 35 % and p/e 10 valuation(as in my pure uranium stock calculations on www.loparn.com ), the additional potential value per VEM share would be USD 10 x 0.3 x 0.65 x 50 x (2 to 4) x 1.1 CAD/USD x million/100 million or around CAD 2.15-4.29 Discounted with my "normal" high riskadjusted 25 % yearly interest rate you get a 2007 value of CAD 0.70-1.41 per VEM share for the uranium project. The interest rate 25 % corresponds to a total 47 % risk discount compared to a calculation with a 10 % interest rate.
In summary Vena Resources 2007 price target is CAD 2.61-3.32. The other projects thus are treated just as a possible bonus to the valuation in this calculation. Therefore I think VEM is a very fine long term choise for a stock portfolio with an attractive risk/reward ratio.
Anyone with other input data can easily change these figures and do their own, very rough, but simple, and I think useful, calculations.