Valuation discussion at the showI attended the show last Monday afternoon with really only two objectives: to speak to someone at the CUU and Western Copper booths.
I met Elmer and we got into a discussion around valuation. He tried to convince me that real option analysis is a superior valuation method compared to NPV analysis because it "gives credit for the cash flow that will come in years 10 and beyond".
That statement told me that the NPV on this project probably won't change much (despite Vette taking out his electronic yellow highlighter and pumping Rhemium cash flow) and that the highest buyout price we can hope for is $2 per share!.
With Elmer's logic, all companies should be valued at 100X cash flow because there may be a 100 year revenue stream. Discount rates are used for a reason...a dollar today is worth more than a dollar tomorrow.