CorrectionIn previous posts I've presented some estimates and sensitivites of LSG stock to various changes in POG, Production rate, interest rate and reserves. It has now been pointed out that I used the wrong discount factor in these estimates. So, here they are again, in case someone took them to heart:
Assuming 5x10^8 shares outstanding, reserves of 3.4x10^6 ounces, production rate of 200,000 oz/year giving a mine life of 17 years, and a profit of $400/oz, the present value of the expected cash flow per share is $1.28.
If the profit rises to $500/share, the present value is $1.60
If additional reserves are discovered that extend the mine life to 37 years, at $500/share profit, the present value becomes $1.94
If the discount rate in the previous estimate changes to 11%, the present value is $1.78
Finally, if the production rate per year doubles, using the extended reserve so that the mine life is reduced to 17 years, and the profit is $500/oz, the present value is $3.21.
My previous sensitivites are more or less correct, but obviously the share price estimates aren't.
None of this takes royalties, taxes and other such expenses into account.
Moral of the story - don't believe everything you read on Stockhouse and do your own due diligence.