RE: RE: RE: RE: A 0.25 ratio should be fairWhen you buy a company you cannot value it at this year cash flow, it's the future cash flow stream that counts.
Also, all the good potential of making new deals that you mention, even in a distressed market will need cash (capex) to get done. And capex need to be subtracted from cash flow.
So, it is fair to compare the companies basing on silver streams they have already paid for.
2009 cash flow will be something unusually high for SST, and steady state production will be lower.
And, anyway, even $45M of cash flow in 2009 would not buy to you an increase of future production of more than 30% if spent in new deals (which is substantial but we are not talking doubling the value of SST here).
We must also note that valuations based on market Cap per ounce in the ground is misleading in the case of SST because they have a very unusually low high production/reserve ratio from underground mines that will not be mined fast enough.
In the case of Neves Corvo they have 40 years minelife (not counting resources) and I think it would be difficult to find a financial analyst giving any tangible value beyond, say, 15 years.
If you look out there, many mine explorers/developers will stop spending exploration money when they reach 15-20 yrs of reserve.