RE: RE: RE: Remember This Story??The following is a link to another video interview with Baldock on October 21, 2010, which provides a more updated picture of the turnaround process.
Valuation
Even though the stock price of Yukon-Nevada appreciated significantly from its lows, the company is still undervalued and the future price potential of its stock is tremendous. The company announced that it is currently producing gold at an annual rate of 150,000 ounces per year. This translates into the following cash flow calculation:
| Annual Production (In Ounces) | 150,000 | |
| Price of Gold | $1,300 | |
| Cash Costs | $600 | |
| | |
| Revenues (150,000 x $1,300) | | 195,000,000 |
| Mining and Processing Cost (150,000 x $600) | -90,000,000 |
| Gross Profit | | 105,000,000 |
| | |
| G&A | | 5,000,000 |
| Exploration Cost | | 5,000,000 |
| Operating Cash Flow | | 95,000,000 |
| | |
| Number of Shares | | 1,001,675,000 |
| CF per Share | | 0.09 |
Assuming the price of gold is $1,300 per ounce and the cost to produce an ounce is $600, the operating cash flow comes out to be $95 million, which translates to
.09 per share. Gold mining companies trade between 10 to 15 times the operating cash flow. Consequently, Yukon-Nevada should be trading between
.90 and $1.35 per share very soon based on the current production level. But, as mentioned before, the company is in the process of increasing production, and when this happens, the stock price will move up much higher. In 2011, the targeted production is 250,000 ounces per year, and this will translate into the following cash flow calculation:
| Annual Production (In Ounces) | 250,000 | |
| Price of Gold | $1,300 | |
| Cash Costs | $600 | |
| | |
| Revenues (150,000 x $1,300) | | 325,000,000 |
| Mining and Processing Cost (150,000 x $600) | -150,000,000 |
| Gross Profit | | 175,000,000 |
| | |
| G&A | | 5,000,000 |
| Exploration Cost | | 5,000,000 |
| Operating Cash Flow | | 165,000,000 |
| | |
| Number of Shares | | 1,001,675,000 |
| CF per Share | | 0.16 |
When the annual production of 250,000 ounces per year is achieved, the operating cash flow will be $165 million or
.16 per share. Applying a multiple of 10 and 15 translates to a stock price of $1.60 and $2.40 per share.