Upside of inflationInflation tends to adjust replacement Costs. What are the replacement costs of Gibraltar currently? Another way to look at it is what would it cost to replicate all of TKOs assets, including the 150 million investment at NP. I would say looks something like this.
1. Gib 600 million value in 2010. To replace 1 billion. Since mine life is still well more than 20 years this should be valid. 2.15 bucks a share
2. NP All the drilling etc is at least 55 cents per share
3. Florence about 100 million invested or 35 cents a share.
4. Yellowhead about 50 million invested or 20 cents a share
5. Aley about 30 million invested or 10 cents a share.
6. Cash we have about 30 cents a share cash currently (not including notes)
So we have 1.33 debt per share and less 3.45 or 2.02 a share replacement cost. So currently we are sitting at replacement cost. Which of course means currently we are not valuing any of our earnings potential.
But critically thinking, 600 million of 2010 dollars may not be so easy now. Like a house in 2010 is not worth the same as a house now... Let us say 1 billion now. Added to all the other sunk costs is likely 1.4 billion to replace all the drilling, NI 4101s, all that good stuff. So less debt the cost to replace our current investments, which gives nothing for all the rock we have is around 3 dollars a share.
So let the tsx venture sell all the crappy dot bong companies with 700 times PE ratios, let the tech companies come down a little. We are anchored at 2.70 cent copper currently which is where we break even give or take.
Let the good times roll.