RE:RE:NSR E Letter just landed in the mailhighper wrote: interesting read and an even more interesting chart....the only qualification i would make is mineable ozs do not always equate to resource ozs... some of the more optimistic posters have stepped over the football big time in this regard. But the NSR numbers give an excellent insight into the potentiality of the goldstorm zone in the event that the drilling confirms even the presence of a modest discovery.
Agree highper - 30 million Measured, Indicated and Inferred ounces will not equal what is ultimately mined. That said, based on the comparisons I've made between Iron Cap drilling through 2010 (which resulted in a reserve of 5.1 million ounces) and Goldstorm drilling so far, I think I can demonstrate 5 million ounces in the shallow GS300 category. Those ounces are much more likely to be extractable and developed. So my version of the chart would show the 5 million ounces to be worth the $96 million in NSR. However, I would show that over 12 years of open pit mine life, not 20 years.
That would provide $8 million/year to Teuton or $.145/share, and then $1.45 on the share price at the P/E of 10 and $2.90 at a P/E of 20. I don't think a 20 P/E is out of line since I believe in distributing part of the NSR to shareholders as dividends. It's also not very high compared to almost all other sector companies. Newmont and Barrick might have lower P/E ratios, but Newcrest as an example is at 29.
Bottom line, I show Teuton as a $2.90 stock based only on the 5 million ounces that I already know exists at Goldstorm within the top 300 meters from surface.
One final factor is that in situations like this one, the ultimate stock price peak usually rises well above the current valuation since there is a lot more to add this year. Garibaldi was a great example, but ther are many more. Silvercrest, mentioned by Mr. Sprott along with Teuton this week, has a $1Billion market cap and no revenues as yet, with 89 million ounces of silver equivalent expected to be produced. With the silver/gold ratio at nearly 100/1 that's a $1 Billion market cap for the equivalent of about 1 million gold ounces at the curent metals prices.