RE:Forward Valuation of GGDTheRock077 wrote: Enterprice value is merely the market cap plus debt minus cash.
While no single metric can capture all of the company's valuation, the EV to Ebitda ratio is increasingly used to value stocks.
This is because it enumerates balance sheet and margins in a single simple value.
So, going forward for GGD and taking recent operational optimizations into accout ( SART, Double Stacking etc ) and using the forward production levels contained in the corporate presentation, we have ( all numbers in C$ )
Market Cap.................................................$57 million ( CAD )
Debt.............................................................$0
Cash , Cash Eq............................................$40 million ( CAD.. includes NSR )
Current EV....................................................$17 million CAD
Forward Production.......................................2.4 million oz/year
Forward Cash cost........................................ $9.50/oz ( CAD)
Forward Silver Price.......................................$20.5 /oz ( CAD )
Ebitda Margin.................................................53.5 % ( $10.5 / $20 )
Ebitda ............................................................ $26.5 million ( CAD )
Peer Ev/Ebitda Multiple...................................9.4
So, We can see that GGD ccurrently has a Ev/ Ebitda multiple of $17 million / $26.5 m = 0.64 times
The Peer average is 9.4 which is an order of magnitude too low.
If you wish, remove the $20 million ( $15 million US ) for the NSR, yet our Ev to Ebitda multiple is still only 1.4 times or an undervaluation of more than 6 times too low.
In other words, our fair value is close to $2 per share, if management can execute on its projections of production ( 2.4 million oz per year ) and cash costs are reduced from $12 cad per oz to $9.50 per oz.
If they can sell that NSR and use the cash equivalent to make an accretive acquisition, valuation will exceed fair value.
The key here is management competence.
Languille has yet to show us his mettle.
This accounts for the extended slide in our share price since his elevation to CEO in 2016.
The sale of SG was a very good move for his image.
On the production sude it has not been so good.
His 2016 move to stack twice as much per day lasted only 2 quarters, as recovered metal was much lower than forecast due to filtration rates.
He then decided to reduce stacking height and stack instead quality agglomerate......except that this also did not work.
Since then, they began a multiple optimization changes to stacking, agglomeration options, stacking and SART.
Results shown in the Corporate presentation are very impressive with recovery rates nearly doubling from earlier pads.
We shall see if this translates into continued gains in subsequent quarters of this year.
If it does, we have an outstanding investment here with multiples of reasonably expected upside.
Well said, but they have already five quarters of increasing production. I believe the company is already and permanently on growth mode.