ny gmp values sdl @ $1.32 , page-12

Hi Matt747,

I was reading HC at late today so I don't know much of the content of your post re. detail of valuation "NY GMP values SDL @ $1.32", being put as moderated.

I guess by reading the whole thread, the broker (GMP) has valued SDL @ NPV = $1.32 , but put a price target at 20cts. This looks normal to me as they need to appy a risk factor (p/npv) on DCF valuation as SDL is not yet in post-BFS/funding and production phases yet.

So in SDL situation case, GMP have applied a multiple risk factor of 0.15 x $1.32

Brokers can apply different risk factors when doing a company valuation, but bearing in mind that the risk factor will change when the company status move from:

pre-BFS --> Pre-production (funding) --> production phases.

Depending on the company, when in pre-production i.e post-BFS/funding, the risk factor (P/NPV) could be close to a multiple of 1 (1.x), and in production, they could have a P/E of 2 to 5, etc...

So to translate this, SP could be $1.32 and above once SDL reached the funding and production phases.

Likewise when using Valuation Metrics and considering the risk factor between different stages of iron ore company , the Enterprise Value (EV) per resource (tonne), varie from Pre-BFS --> Pre-production (Post BFS) --> Production.

Following are examples of EV used by Ambrian in March 2010

There are also examples of my SDL projection in 2010, using different multiple of risk factors in "Part II, Projection SP using Enterprise Value (EV)" from the following link:

http://hotcopper.com.au/post_threadview.asp?fid=1&tid=1186486&msgno=5425964#5425964

So let's hope that in few months, SDL will move to post-BFS/funding phase and then we can see SP re-rating significantly.