Valuation24 Jul 2018 11:52
The value of what is in the ground is no where near what can be realised by an exploration company due to risk, CapEx requirements, time, country/political risk, commodity prices etc etc etc....
I know people have been going on say 1% of in-ground value but I prefer to go on what some of the analysts (whose day job is to research, research, research etc.... and will have greater insight than a lot of us PIs).
Red Cloud Klondike have a long position in Solgold, have visited the site, provided advice and helped with the raising. Therefore it is a good bet that they may be positive about Solgold. Plus they have a wealth of experience in Exploration plays.
If you go on the latest research note based on the 10 Priority target RNS released on 18th July and scroll to the last page they show a comparison of how the market is rating (through share price) of peers in the Exploration sector.
Now they state that the current inferred (i.e. lower level of confidence) resource estimate release was 16.18 lb of Copper Equivalent (1.08 bt @ 0.68% CuEq). Which, when taking 85% of it and attributing the # of lbs to the market cap, it gives the company a value of C$0.037 per lb of copper equivalent compared to a peer average valuation of C$0.026 with ABSOLUTELY NO VALUE PLACED ON THE WIDER LAND PACKAGE. Solgold are the LARGEST LAND PACKAGE HOLDER IN ECUADOR as an explorer....
Other analysts like Echelon have used a target of $0.04 per lb of Copper equivalent for a valuation of other exploration companies.
I think, at least in terms of short term, when looking at the updates to the Mineral Resource Estimate that is probably a more evidence based approach to the valuation gap (just looking at the Alpala resource and not taking into consideration any of the other tenements...) that investors in the know, or certainly those that subscribe to the Investment analysts over in Canada or the US, will use for a value case.
As numerous people have said there are a huge amount of catalysts that can help:
- Updated MRE = more tonnage and, according to the RNS, upgrades to the high grade core
- The regulation change in Ecuador that means we can drill earlier may be something we want to expedite at Porvenir or Blanca Nieves which could provide some decent core
- The PEA will give the market the first indications of the financial viability of this and start to put headline numbers. There have been a number of takeovers that come AFTER the PEA is released...don't forget that Major Company Boards still have to make things stack up for their Directors and Shareholders, they don't have Carte Blanche to do what they want
- I am intrigued about the delay in the Spinout that Cornerstone are undertaking to spinout all non-Solgold share or ENSA assets into a seperate vehicle, basically packaging the Cascabel and Solgold value for takeover. If this is taken out imagine what it could do for us...
GLA and DYOR... the sky could be limit eventually....but has to be evide
Sign In
Follow the stocks
