There is serious value here The purpose of this exercise is to assign a value per pound to the alleged 50,000,000 ounces in the ground at Silver Cliff based on the market cap of the company. I would welcome any comments on whether I made any glaring errors. A caveat would be that Viscount firmly believes they'll ultimately have much more than 50 million ounces. Also, that whatever value I come up with assigns $0 value to Cherry Creek. (I smile when I type that) Basically call this "at what market cap per ounce of silver am I getting Cherry Creek's potential for free?"
Fully diluted:
40,264,094 Common Shares
15,108,526 Warrants (roughly 10 million at $0.25 and 5 million at $0.70 - assume all will be exercised
3,641,000 Options (strike is $0.62 or lower on all - assume all will be exercised)
59,013,620 Fully diluted
(note that VML will pull in around $7 million in cash if all these are exercised - I did that math in my head while looking at the December 29th MD&A, as it's not a focal point to my analysis, but the value is likely pretty close. Approx $6 million from warrants and $1 million from options)
Market Cap at $0.70 CAD per share is thus $41,309,534. That's Canadian Dollars. Let's call it $30,749,072 USD.
50,000,000 ounces.
=$0.615 of market cap per ounce of silver.
Silver ended the year at $15.99 USD per ounce. I don't believe that we will get "27 ounce per tonne over 15 metres" intercepts throughout the property. That doesn't matter though. The deposit is shallow and open pittable. Whoever mines this would potentially make money at 5 ounces per tonne ($80 of revenue per tonne of dirt moved), if that's what it ended up at for the entirety of the ore body. (Remember, very shallow - starts 15 metres down)
You have to bear in mind that companies like Newmont mine 2+ grams per tonne of gold deposits and survive doing so. As a comparison:
2.3 grams / 31.1035 grams in a troy ounce = .074 ounces gold per tonne @ $1150 per ounce gold.
= $85 revenue per tonne of earth moved.
Newmont's Long Canyon is supposedly going to have all in sustaining costs of $600 per ounce or $19.29 per gram. 2.3 grams per tonne. Therefore $44.37 in costs per tonne of dirt moved. Therefore, it should be quite profitable as the revenue far outstrips the costs per tonne. Note, that Newmont paid $2.3 billion for Long Canyon 5 years ago.
https://www.newmont.com/newsroom/newsroom-details/2016/Newmont-Declares-Commercial-Production-at-Long-Canyon-the-Most-Significant-Oxide-Ore-Discovery-in-Nevada-in-More-than-a-Decade/default.aspx
So, if all Silver Cliff has is 5 ounces per tonne over the entire orebody....there is good value here and the market is off in valuing it at 61.5 cents per ounce based on the expected 50,000,000 ounces of silver. (we do have some comfort here given Tenneco's historic drilling records)
I just pulled this together in my mind over the past 45 minutes. I would welcome feedback.