RE: What was the reply?28 Nov 2010 22:36
This is from the REE thread on ADVFN
I am hoping you can throw some light on a possible valuation of 60 million lb uranium JORC inferred resources. My reason for asking is with respect to Forte Energy:
As stated in the announcement of 25th June, 2008, as part of the JV with Areva:
"It is envisaged that Areva would earn an initial interest in the Joint Venture on commercial terms prevailing at the time based on internal valuation and market valuations and would be able to increase this stake during the pre-feasibility phase and with the opportunity to eventually increase its interest to 100% at exploitation time on commercial terms prevailing ;
* Areva will also have the option to acquire 100% marketing rights on any future production from the Joint Venture tenements."
So, we really should know what the commercial valuation is likely to be in the event FTE delineates a minimum of 60m lbs of uranium JORC inferred Resources.
See here: http://www.investegate.co.uk/Article.aspx?id=20080625070025M7123
My own 'valuation' is very simply obtained (using info from 2009 as a guide):
Hanson Westhouse (Nov.,2009) gave an ‘in the ground’ valuation metric for U3O8 of $4/lb when the spot price was $44/lb. (See here: http://www.proactiveinvestors.co.uk/companies/news/9726/hansonwesthouse-encouraged-by-forte-energys-assay-results-from-mauritania-ups-price-target-9726.html )
Now, @ $59.50/lb, based on the same extraction costs, the current ‘in the ground valuation’ would simply be $4/lb + (59.50 – 44) = $4 + $15.50 = $19.50/lb
Shares in issue, Nov., 2009 = 567M
Today, Nov., 2010 = 580M
What are current reserves/ resources?
Guinea, Firawa: 11.6M.lb (JORC resource)
Mauritania (expected JORC resource): 60 - 80M/lb
Therefore, added value for uranium resource = (11.6 + 60M/lb) x $19.50 ( ‘in ground valuation’ ) = 71.6 x 19.5 = $1,396.2 Million
= £875 Million (approx.)
Value per share = 875/ 580 = £1.50
Of course, this valuation omits other assets - including the very possible large REE deposits in the Firawa discovery – but it is only meant to provide a base (current sp 8p).
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