Price targets will be cautiousRoyalty companies are unusual in that they can sell for 1.5 to 5.0 times NAV
Currently, we are selling at about 2 times NAV
Infrastructure companies such as REITs typically sell for 0.9 to 1.05 times NAV or just about at NAV.
These types of companies have no wild card news such as 50% increase in rent or a 50% decrease in rent (except in Fort McMurray)
Many regular mining companies sell for 0.6 to 0.8 times NAV if we use steady commodity prices.
Extraction costs are usually underestimated so, in reality, they trade at one times NAV.
Due to the royalty NAV situation sell side analysts are hesitant to set a bullish target in order to avoid embarrassment. For example, Canaccord has just raised its SLW target to $45 CAD from $44 which is very modest indeed. Expect other houses to be similarly cautious.
SLW is now on track to sell nearly 60 million ounces of silver equivalent within 2 years if we get a few breaks and do not add any new streams. If we get $25 silver commodity price that would take us to close to $2b CAD in revenue. Pascua Lama could be like gravy waiting to happen. Any material good news about firm production plans at Pascua Lama could give us an instant 10% or 15% share price boost but we should not hold our breath.
Only one thing for us to do. Enjoy the ride.
mat