DoctorFouad wrote: I believe you are confusing / not taking into consideration many concepts/factors :
1- there is a difference between current market valuation of companies and fair market valuation of companies. If current market cap is higher than fair market cap then the stock is overvalued, if current market cap is lower than fair market cap then the stock is undervalued. the bigger the difference the higher overvaluation/undervaluation will be. You need to buy extremely undervalued stock like RRS to make serious money in the long run when teh company starts production and become cash flow positive.
2- fair market valuation depends on a myriad of factors, you cant just give a number like that working for every case. its a question of risk/probabilities/timeline of going into production and executing flawlessly.
In short, the lower the CAPEX requirements (hgher probability low risk of getting financed), the shorter time to production period (less risk), the higher expected years of production (Sitec already 50 years and going), the more advanced/derisked the project is, permitting process, the copmplexity/simplicity of the flowshieet (risk of technical problems to ramp up production, for example a lithium project is far more complex than iron project), the presence or not of customer orders/off-take agreements (very crucial)...etc all determine what you can put as a discount for a fair valuation.
It is clear that RRS silica project is one of the most easiest projects that a junior mining company could bring into production : very low capex, very simple flowsheet,
high margin, low operating costs, easy permitting process, fast timeline to production...etc. The main risk is to find customers. So if RRS could sign off-take agreements/ensure orders, then the fair value will be so much higher.
I already gave in many other posts a fair value expected valuation of RRS in a 1-2 years timeline from now. And even considering dilution and the most conservative scenarios, we are talking a minimum of 100Million$ market cap fair value. So we are a far far away from that, basically at least a 10x-20x bagger from current levels. And that is being conservative, that is why the stock is extremely undervalued.
Hope that helped,
polo11 wrote: I am just talking reality of the Market - If you google NPV calculation you can do assumption of any projet. you need
CAPEX number
Cash flow per year
and a discount % generaly 8% is the Standard of the industry.
You will have your NPV
Multiply it by 18% and will give you whr should be your Today market cap
LeMarcus like to do assumption.....let say I will take SITEC - Anybody can challenge my assumption number - will try to take realistic on.
They Produce 250k ton per year
Let take a profit of 20$ per ton or 5m a year
Tak an initial capital of 15m to built the operation
Will give you a NPV at around 37m
Multiply it by 18% = 6.7m market cap value
Now, maye I am wrong with some assumption - just play with number that you thng it right and you will find a fair market value.
When you come the PEA level you enter in a different word were analyst like to play with those number....
Hope information is valuable - just trying to say you wht I am earing in the street.....again maybe I am wrong - for those who are bachelor in Finance - have fun to correct me