RE: RE: RE: RE: NPV (discounted (8%) -- BAJA MrX2 and Doug. Thanks for the confirmation about the 8% rate being high once we start production. Been a few years since I worked with present value analysis and discounted revenue streams, so excuse the cobwebs.
One thing I remember is that beyond a 25 year projection the numbers were such that it had little impact on the current valuation. Unless there is a significant break in the timeline for revenue (as would be the case here with Manganese production being added - value TBD) the value should not change significantly using the same discount rate if it was projected out 50 years instead.
John G. and the Board have always been on the conservative end of things and I took their 8% as being the high end of an appropriate discount rate when it was first announced. That makes a major difference in the NPV numbers if future revenues are discounted at a lower rate once production starts.
And, MrX2, the Board will not project possible future values, other than in general terms. John G. in his last conference call was asked that exact question and he stated that he believes (without Mn) that the project will yield a net profit of 80 cents a share. The markets will dictate where the price will be but it is typically a multiple of the income per share, and falls around 10-15 in many cases. He suggested to the caller to "pick his multiplier". That answer regretably did not satisfy the caller who claimed to hold 7MM shares and hopefully is voting GOLD.