Very Juicy Valuation vs Peers- Market cap of ~$183.4M (fully diluted)
- Working capital of ~28.6M (June 30)
- 85koz of annual production for 2011
- Life of Mine 3-6 years
- Total M&I Resource of 1.0M
- Gold loan of <24.4koz
- LT debt $17.2M
Determining the overall risk for OYM is tricky since a lot of new info is forthcoming, but the potential reward is tremendous. Liquidity risk is low-medium since the company has good working capital along with positive operating cash flow to fund future capex. With gold at $1250 and $450 cash costs for 2011 based on 85koz of production, OYM's operating cash flow would be ~$68M. As a result, the forward OCF multiple is just ~2.7x on a fully diluted basis. Going out further, the stock is trading at ~1.6x, 1.0x, and 0.8x OCF for 2012, 2013, and 2014 respectively. I don't know what the average multiples are, but for juniors I'd guess 5-8x and for mid-tiers 8-12x. As a junior, Olympus should currently be trading at
.82. As a mid-tier, it could be worth $4.68 if all goes according to plan, but that's highly speculative at this juncture.
A critical step to realizing the ambitious production targets will be on the exploration front. OYM needs to aggressively drill for more resources and successfully convert them to reserves. They have a lot of ground to cover with 3 mines. I look forward to all the upcoming drill, reserves, and resource updates to increase the LOM to at least 8+ years hopefully.