RE:Not rocket scienceAllthewaydown wrote: Tahoe with Escobal runs an EBIT of about $C 0.60/yr. Tahoe without Escobal runs an EBIT of about $C 0.25/yr. At a P/E of 25 the equilibrium share price is $15.00 with Escobal and $6.25 without it.
The numbers slide up and down as gold and silver prices change (and operating results vary from period to period), but for the time being that is pretty well the matchbook version of valuation. Company was overpriced during the brief foray to $C22.00. However, right now the share price ~$C 7.00 pretty well implies that Escobal does not exist. Therefore one might consider that the current price is almost 100% de-risked, with a current price that implies somewhere in the order of a 90% chance of writing off Escobal completely. The market reaction has been way too negative way too soon. At the moment you are getting Escobal for free as a throw-in when you buy the gold properties at fair market value.
Maybe its the P/E ratio of 25 that is wrong in your math. Thus there is risk factored in and the P/E ratio that goes with this type of investment is rather cut in half what you are using.