ValuationI have read in a few places that precious metal producers trade for 10x operating cash flow. Someone had posted that they should get a lower multiple due to lower ounces in the Reserve categories. That's possible, I'm not really sure how the funds will look at LMA. What I do know though is that if we consider that LMA has 1.7 million ounces in M&I resources then we have a 17 year operating life which is not short. Add to that the 600,000 ounces in the inferred categories plus the company's ability to add more ounces every year.
I'm not sure that LMA deserves a discount to it's peers. LMA is showing successful operating performance. Costs under control, production growing, ounces growing, credible management. I think LMA is worth the 10x operating cash flow multiple for these reasons. And the bonus a buyer will get if they pay that is they still get the production growth for free and the VMS for free!
10x cash flow gives us a $440 million market cap, in C$, which is a touch over $3 per share. That's a long ways up! And includes no gold price increase, no value for the vms, and no production growth beyond the 2009 level.
I am holding tight. Continued success to all!