Correction + stock potential 10 x current priceOn the other hand with totally 85 % debt financing , as a preferred possibility discussed in the feasibility study, total cash flow would be, assuming 10 % interest rate, USD ( 255- 8 x 10 % x 85 % x 114 ) = around USD 177 M , after tax USD 133 M.
Replaced paragraph :
The 2010 discounted value of USD 133 M at 10 % interest rate, is around USD 79 M, if you approximate with all the 8 initial years of cash flow achieved 5.5 years from now on a weighted average base..
With 15 % of USD 114 M financed via new shares at current low share price CAD 0.16 there would be 112 M new shares and a total of 191 M.
Thus in the 85 % debt financing case the motivated stock price would be CAD 0.41.
With Los Pinos included then there could be a potential to around 0.5 CAD, in the 85 % debt financing case, with current metal prices weighted average 1.09 USD/lb.
Therefore a step by step financing process where the likelihood for of a better stock price when dilution takes place - especially if metal prices continue to rise - that would probably automatically lead to a smaller dilution for current share holders. And if Tamerlane could achieve 85 % debt financing TAM would problably cause stock to explode.
Replaced piece and addition :
Added this more optimistic scenario with 19 % higher metal prices, which in the Tamerlane presentation corresponds to a net cash flow of USD 495 M (which after interset USD 78 M and tax 25 % = USD 313 M, and discounted to 2010 USD 185 M) :
A corresponding situation but with a more fortunate scenario with 19 % higher metal prices, i.e. weighted average 1.3 USD/lb, and with the assumption that the equity financing of the remaining 15 % of USD 114 in stead could be done at an averagal stock price of CAD 0.25 after such a described stock run would imply the need for just 68 M new shares for a total of 147 M shares, and a similarly calculated stock potential to USD 185/147 M per share or 1.32 CAD without counting Los Pinos and let say CAD 1.6 with Los Pinos.
All in all TAM could be worth 0.16-1.6 CAD or so , roughly speaking ;-) . At least the calculation cleraly demonstrates the extreme leverage to
1. stock price when new shares are issued.
2. metal prices - over 100 % potential further if metal prices rise 20 %.
The less financing, before metal prices rise or a less pessimistic Mr Market himself may rise the stock from current levels, the better...