TSX:SRU.UN - Post by User
Post by
Cdn_clipperon Sep 02, 2000 12:17pm
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Post# 2428693
How do you come up with $50?
How do you come up with $50?
Winston:
I have played around with the numbers on this play. I come up with something more in the $20 (CAD) range. My basic assumptions are:
a) 100 million metric tons at existing assays.
b) $400 million Capex to develop the site.
c) After tax discount rate of 21% (who would use anything less?)
d) 3 years to develop before production commences
e) 15 year life - level production.
f) Metal prices remain at current levels.
g) 35 million shares out (by the time somebody takes it over)
h) After tax returns of $25 per metric ton.
The model I use is extremely sensitive to after tax returns per metric tons and the discount rate.
The value tends to increase fairly linearally with changes in the quantity of the ore body.
I'm hearing very positive rumours about the summer drilling program. I think the remoteness of the site combined with the general lack of interest in Mining is keeping this stock from moving up faster.
With some positive news releases concerning intersects and assays (hopefully in September) I think we could see some dramatic moves.
Cdn Clipper