Paradigm's Documents has MANY questions to consider asking Nord as to how they can justify this low estimate of share value.
Let me begin with data from Paradigm's ACTUAL analysis documentation.
Paradigm writes that Based on the analysis of Paradigm Capital, the weighted average cost of capital for the assets of High River in Burkina Faso would amount to 11.7% and that of Russian assets to 10.3%. Paradigm Capital believes that, given the foregoing analysis and knowledge mining, a discount rate of 12.5% ??would be appropriate for the operating assets of High River and a discount rate of 15 % is indicated for active High River that are in the planning stage. To the analysis of discounted cash flows, Paradigm Capital was not based on a single set of cash flow compared to the projected value of the company, but rather conducted several sensitivity analyzes. Depending on the cash flow from the business value of High River and discount rates presented above, the analysis of discounted cash flows Paradigm Capital has established ranges of net asset value due to sensitivity analyzes conducted. Values ??of the net assets extremes were obtained by modifying several assumptions, including: (i) the future metal prices, (ii) capital costs, (iii) operating expenses, (iv) the discount rate and (v) the useful life of the mine and the production rate of the mine, and other factors. (translated by Google)
The first line of the VARIOUS RANGES is interesting.
Summary of the fair market value of High River
Weighting Floor Ceiling Weighted at
Price / value of the net assets 1.09 1.61 20.0% (What did they value Prognoz at???)
Various Ranges
1.09 1.61 - Price value of net assets weighted at 20% (This is the issue I highlighted above)
1.81 1.94 - Premiums of Previous Operations weighted at 15%
1.42 2.02 - 2013 EBITDA Enterprise Value Ratio weighted at 10%
1.59 2.29 - 2014 EBITDA Enterprise Value Ratio weighted at 5%
1.22 1.81 - 2013 Price Cash Flow weighted at 15%
1.14 1.70 - 2014 Price Cash Flow weighted at 7.5%
1.51 2.37 - 2013 P/E Ratio weighted at just 5% (with a low P/E by analysts! - Russian analysts?)
1.41 2.30 - 2014 P/E Ratio weighted at just 2.5% (yet below analysts are rated at 5%
1.64 1.67 - Ratio Price BOOK Value - What? Prognoz has $0.00 Book Value
1.30 1.64 - Price Targets of Analysts weighted at 5% These are the same analysts PAID by Nord no doubt
0.92 1.27 - Range of Previous Courses weighted at 10% (This is a weighting for 10% due to a share price in previous 3 months of 92 cents to $1.27) Seriously!! This stock was purposely held back and they are using THAT as a basis for 92 cents and giving it a 5% rating. Furthermore, what is the math behind WHERE in that .92-1.27? In the middle? By the time period it was at 92 cents? Seriously flawed IMHO.
100.0% 1.33 1.80
So my issue here is that the weighted averages do not even add up appropriately it appears, as the justification for what weighted percentage they used is not provided. Add to that is the fact that the arrival of the estimates and value placed on mine life is also not warranted to a growing business, with additional 43-101 results not disclosed, and with updated resources on the obvious horizon.
The various metrics from Paradigm for the categories below indicate lows of between $0.92 to $2.37. While I cannot read French, google translate tells me that the Paradigm review is incredibly innacurate when compared to peer market values.