TSX:SRU.UN - Post by User
Post by
Cdn_clipperon Jul 27, 2001 3:03pm
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Post# 4034587
Value
Value
I've been in Starfield for well over the last several years and continue to hold. Now that we appear to be close to crossing over the 50 million tons mark, I'm told that the project should be a viable mine. I dusted off my valuations which are based upon the following assumptions:
a) 3 Years to build
b) $100 million (USD) in capital and infrastructure costs
c) After Tax return of $20 / Metric Ton (USD)
d) 35 million shares out
e) 21% After Tax Return
On this basis, the share values at increasing tonnages are as follows:
Tonnage US$/Share Cdn$/Share
(millions)
50 3.34 4.83
60 4.30 6.23
70 5.27 7.63
80 6.23 9.03
90 7.20 10.43
100 8.16 11.83
The value increases faster than the rate of tonnage build because the capital costs remain fixed for each of the tonnage scenarios. This may not be valid, but at least gives an idea of what kind of value leverage we can get on a fixed capital investment.
Like Winston, I believe these values will only be realized when a large mining company gets seriously interested in taking over the project. In any case, it appears that the value is likely there if you can stand the wait.
CC