PE Ratio, page-2

Stephen
All of the data in the presentation is based on achieving planned recoveries. To date the company has continue to miss their target. They are confident that the extra tank will do the trick but it is understandable that investors are taking a wait and see approach and hence PGI is trading at a substantial discount.

As to the numbers

$530 costs excludes cash expenses of royalty and a portion of overheads not directly attributable to the las lagunas operation plus interest costs.

The $530 is also based on a equivilant ounce so you have to also include silver at 60 to 1 which adds 8333 ounces to the 55,000 to get 63333*(1283-530) = 47.7M. This is close to the operating profit 49.8M. I would have expected it to be almost the same but you just cant know exactly what they are doing in the accounts.

I prefer to keep my cals a bit simpler.

From the quarterlies we know that they are spending close to 41M a year on everything. Their presentation says 83M revenue so I would get 42M cash margin for the year.

Also PE is not a meaninfull measurement for a company with a large debt or short mine life.
Enterprise value would be much more meaningful as this includes both the market cap and the debt and is the real value of the company.

For PGI that's around 80M.

So if everthing goes to plan(and I would not assume that at this stage) then the company is trading on 2 years of net cash flow.

However with a mine life of only 5 years their is not a big margin for error.

Hence this is why a concentrate deal is so important. A concentrate deal will triple production and triple mine life.

However all is this is just hypothetical at this stage as it is dependant on overall recovery getting close to 60%.