borrowed from iii19 Nov 2009 08:59
Quickly throwing some basic figures into the mix:
Plant and Mining costs say $100m payable back at 10% pa over 5 years.
Payments back of $25m per year until debt clears.
Production costs of $300 per ounce, producing 100,000 ounces per year.
Average price of gold $1000 per ounce.
Profits before loan payback = $70m per year, leaves profit of $45m per year.
Choosing a PER of 10, gives market cap of $450m
At $/£ rates of 1.7 = £265m equivalent to Share Price of 173p
Massively increasing once any loans paid off.
Not a detailed estimate by any means, but does show how undervalued KYS is currently with a market cap of £12.5m, if they plan to produce 100,000 ounces per year with such low production costs and the life of the mine looking to be in excess of 25 years.
With these kind of prospects, finding the money to create the mine/processing plant should not be a problem with a completed BFS.
Cheers and GL all.