RE: RE: RE: RE: RE: RE: RE: SND's Potential return well ok if im going to post that i have to follow up with valuations.
ssl was previously valued as high as $1.2 billion. they earned $37.5 million cash flow, thats under $40 million, but call it $40 million. that is 30x cash flow.
fnv trades at a similarly ridiculous multiple, they are earning about $250-$275 million and are worth over $7 billion. to be fair ,they have a ton of royalties on sick assets, but thats still about 25x - 30x cash flow.
royal gold is about 25x cash flow but with prosperity it will be much lower. it actually looks like one of the cheapest streams.
slw was baout 25x cash flows but with the pullback recently it is a lot less.
alaris royalty earned $19 million in the first 3 quarters, annualize that, they are looking at about $25.5 million cash flow annually. seriously, we could hit that in a couple years time. their market cap? $600 million. that is 4x h igher than us. the nature of their royalties is a little different, but still.
SND at $0.40 is about $125 million market cap, yank out our spare $5 million cash, leaves us $120 million enterprise value. at $15 million a year, which seems like a fair number to me use, that is an 8x cash flow multiple. 8x. if we were valued like the other royalties, we'd have to go up 350%, or be trading at $1.40.
and based on lets say 10,000 oz's palladium x $700 net = $7 million, so $22 million cash flow 2 years from now (kinda conservative) x 25 = $550 million market cap / 320 million shares = $1.75, im just doin thi sin my head so its probably a little off
the issue is that donner reserves are too small. 4 years? TBD and NDX reserves are sick, though. and donner has an inferred resource of 2.4 million tonnes. that may stay about the same, or it could grow 3x. we dont know. if donner could grow that resource 3x, suddenly we are looking at a 10 year donner mine life. that is HUGE for us. if donner had a 10 year min elife, that is $15-$20 million /year for 10 years. take into consideration they also hit about 2.5% copper over 19 meters in a drilling program. do you know what that means? if they could mine half a year of 2.5% copper, we'd be looking at $25-$30 million cash flow in a single year from this asset.
CSI probably has a 20+ year mine at a 1,000 tpd. they had a non compliant ni43-101 of 10 years about 10 years ago before all the recent drilling which has been quite successful. and my understanding is that non-compliant ni43101 was quite conservative. anywhoo.
so coming back to SND. at $0.40 x 320 million shares = ~$128 million. we have ~$5-6 million cash, call it $120. we're trading at 5-6x cash flows. if nolan can keep doing lower return, lower risk deals, and stops with this entree 10 year to production BS / poor management deals (rda, TER, NDX), and sticks to stuff like donner and CSI, meaningfully large projects, it is very conceivable thaT SND will trade at a 15-20x multiple, which is a triple for us. and once this thing triples, it will be able to grow at a rate of 15-20% a year for the next 30 years.
the biggest advantage we have at SND is that the average gold stream has a 5-7 year payback. for example mutiny at SSL. 5 year payback, plus 1-2 year construction = 7 years to JUST get the money back.
look at donner. not all the deals are like this, and donner is a particularly fast payback b/c of the short min elife, but we are getting all of our money back in about 4 years. that is insane. that is a better "acquisition" deal than ANYONE else can do in ANY businses. youw ant to buy a tech company? guess what, you're paying 30x earnings. you want to buy a pharma? they dont even earn income, you're buying a drug that you are going to try to commercialize. youre buying a financial services company? 12x multiple, but they have little to no growth. a laundry company? k-bro trades at 11x cash flows. food? mty is about 12-14x cash flows.
SND? snd can (almost) infinitely grow completing acquisitions at 4x cash flows. a zillion times more accretive.
all we gotta do is get over the beginning hump. there is a very real chance we fail. if the donner mine collapses, or there is an earthquake, we are seriously screwed. the donner stream is worth about $90 million.
but if it doesn't, if it gets into production, if nolan stops chasing home runs, everyone on this board who owns shares will be very, very wealthy some day.
i'm going to donate all my money to charity :]