GREY:MLKKF - Post by User
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24~Karaton Apr 01, 2008 9:00am
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Post# 14925650
RE: Mike Surratt in NYC
RE: Mike Surratt in NYCthis draft has a typo correction that got through the first time--Beta process is still a little tricky!
One of the questions from the audience provided a metric for ML’s share price valuation. The analyst posited that, since ML sold 1.6% of Mineral Park’s production to Silver Wheaton for $43 million, that this transaction set a precedent for valuating the remaining balance of Mineral Park. The analyst did this by multiplying $43 million by 67 (which is the inverse reciprocal of 1.6%).
In the audio, he rounded this off to a $3 Billion in implied value for Mineral Park, but actually, it comes to $2.881 Billion. When that amount is divided by 80 million shares outstanding, it places a value of $36.01 per share on Mercator Minerals.
The other comment of interest was, that ML’s extremely capable board had taken upon itself the task of overcoming the glaring deficiencies that are, unfortunately, now so endemic it the Engineering profession today. Not to worry! ML’s solution? To take on that role themselves, by having overseen production management and procurement themselves, and thereby not only saved $10 million in the process, but expedited the entire matter. BTW, Mike Surratt was gracious enough to have provided a gentle warning to other companies that they ought not to try to do the very same thing themselves; that ML was only able to do so because of the exceptional competence of their personnel.