RE: Valuation? I like your question. I have asked it myself a few times. These guys have a great property with ridiculous upside that hosts multiple metal deposits - all of which have very good grades. They are actually putting this thing into production for less than most companies spend on a decent drill program and feasiblility studies. Look at how much money Geologix has spent on Tepal for an example - and our grades are far higher and easier to develop.
So your question - this company has massive leverage to prices. May copper trades at 3.72 per pound. These guys will produce 15 million or more pounds per year. I dont recall what the hedges look like, but stripping that out - lets say a margin of 2.00 per pound of copper. Can't imagine that long term their costs wil be $1.72, more like $1.25 per pound. The website says 1.80 in the first year, 1.20 after.
so lets use the 2.00 number and that deals with hedges and price variations. production capacity is 22 tonnes per day. or 660 tonnes per month, or 1.5 million pounds per month. When they state capacity, the management is basically saying that anything below that means they aren't competent operators. So bank on them hitting it in the medium term. That gives me 36 million dollars in cash flow per year. This will enable them to pay back some debt put a small gold deposit into production and drill out the property. I would say 3 - 4 times cashflow is reasonable until they show some growth and prove their competance. With any kind of visible growth we could see 5-6 times cash flow.
So 1.50 - 2.00 short term, 2.00 to 3.50 medium term with bigger numbers if design capacity is exceeded, the project is expanded or the gold oxides are heap leached right away.
Obviously they are also willing to pay any price to ensure they are not caught short of working capital. hopefully that is the last loan we will ever see at those rates.