Excellent post22 Dec 2020 12:07
By Cornish .....
Here it is ...... OK, so the mine are Targeting 1500MTPD @2.0% Copper, the mill is operating at about 93% recovery.
So that's 1500 x 0.02 x 0.93 which is 27.9 tonnes of copper metal in concentrate a day. Multiply that by 365, gives 10,184 tonnes of copper in concentrate a year. On top of that the mine produces roughly the same number of ozs of gold as it produces tonnes of copper.
At todays prices 10184 tonnes of cu @ $7800 = approximately $79.5 million dollars and 10184 oz of gold @ $1850 = $18.8 million, so with silver call it a gross revenue of $100 million. Take 5% off for smelter charges, royalties and transport that leaves $95 million. Production costs are between $35 and $40 million, so with admin expenses call it a net profit if $50 million (thats US) a year, so about £45 million. So £300 - £400 million valuation gives a price to earnings ratio of around 7, which is actually quite low - and thats without factoring in other opportunities. To get to that level requires the mine proving it can hit hits production targets and the prices staying at current levels for FY 2021, then by the time the 2021 results are announced it should be at 3-4p
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Now imagine all the above and reduce everything by 50% .... you still end up with roughly 5 x your money on a normal valuation.
That includes gold / copper plunging lower from current levels .... just ain’t happening.
As usual heavily followed stocks over shoot on the upside and after selling out of Ggp around 2p thinking I was a genius I ain’t going anywhere.
The key ?: once the price breaks 1p then every 0.1p rise will be 10% compared to 25% now.
Hence when it reaches 2p then 0.2p would be 10% where as now it would be 50%.
Boy o boy have i learned from Ggp.
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