RE: Valuation of CZN 200 million profit?
1000 tonnes per day 10% zinc/lead, .40 copper and 6 ounces (170gpt) silver.
Assume 1.20 lb for zinc and lead, $35/ silver and 10,000/ tonne for copper (the official cupricity 2014 target prices)
90% recovery factor included in our milled rates.
In one day we produce 100 tonnes of lead and zinc, 6000 ounces of silver and 4 tonnes of copper.
metal value of 2200lbs times 100 times 1.20 times 2 is $528,000/ day for lead and zinc.
6000 ounces times 35 dollars is 210,000/ day.
4 tonnes of copper is 40,000 day.
Total daily gross is 250,000+528,000 or $778,000/ day.
340 days of operation. This is a camp job so no point in shutting it down other than maintenance. So our gross for the year is 264 million. Lets assume it's $50/ tonne to mine and process the ore and it's 100 tonne to ship out the concentrate (30 hour round trip at $4/tonne hour to ft Nelson with a load out to CN rail and another $50/ tonne to get it to a ship, from which point cost is negilble. Lets assume a 70% reduction in concentrate to ore ratio so we ship 300 tonnes per day, (remember we will only ship ore on the winter road for about 4 months so there will be storage on either end) Nice quick short math it's $45/ tonne to
ship out the ore. Let's say I am wrong by 37% contingency so we have $95/ tonne to mine process and ship but I add $35/ tonne to $130 tonne. So our daily cost is $130,000 times 340 days or 44 million a year. net profits are 220 million a year. 5 times earnings is a billion dollar market cap or $5/ share.
Thats my goal to get out at. In a fantasy lad scenario increase the price of zinc to $2.50 and silver to $75 and you can get a much higher market cap of $10 plus. Anyways 8 times your money (67 times eight is 5.36) is not too shabby to look forward to considering I am targeting a 5 times earnings scenario. At 20 times PE I think you are dreaming. Anglo American is trading at 6.4 times right now.