Pangolin Diamonds Corp V.PAN.H

PAN TARGETS & VALUATIONS

[koldrake1859]

The long term breakout above 0.60 was decisive. We may come back to close the gap at 0.80-1.00 before taking off again to the upside. Very stong hands are accumulating and will buy on reactions. The technical target for this formation is about $9 / share.

The market value of unproven Bakken acreage is $1100/acre x 161,000 acres = $2/share (that's the bottom line)

Minimum safe targets are 50% Net Asset Value NAV ($4.20 / 2 = $2.10) as provided by the company PLUS potential unproven Bakken acreage at  market value of $2/share (which if proven is then worth $11 per share). This gives us a minimum valuation of $4.10/share and includes huge margin of safety.

However, since the company used $7 for the price of gas and 10% recovery it would not be unreasonable in today's price environment ($12 natgas and rising) to accept the NAV at full face value. The target then becomes $4.20+$2 = $6.20.

Futhermore when the company states that it controls 161,000 acres of Bakken land we expect that this statement coming from a geologist would assign a 50% chance of this being proven. this would then give us a target of $4.20+ ($11 x 0.5) = $9.70.
 
Now if we consider NAV at face value and a 100% Bakken acreage we get: $4.20+$11 = $15.20 / share

Finally applying natural gas market prices to the NAV and full Bakken potential we get $7.2+$11 = $18.20/share 

Now Let us apply some probabilities to all this and we get a valuation = $7.39 / share

(2 x 5%)+(4.10 x 20%)+(6.20 x 40%)+(9 x 15%)+(9.70 x 10%)+(15.20 x 5%)+(18.20 x 5%)= 0.1+0.82+2.48+1.35+0.97+0.76+0.91=$7.39

So there you have it. You can cut it and slice it and dice it anyway you like but all indications are that PAN is very much undervalued at these levels.