Great post mate......just a bit of an extension to the discussion.
Currently the DFS states that we are looking at a EBITDA of 561m over 8 years - this puts annual earnings at 70.1m (EBITDA). As noted by SB producers are being valued at 20 x EBITDA - it seems that SB figures that CXO should be worth approx $1.16 per share [(70.1 x 20)/SOI (1.2b)]. This would put CXO's value at 1.4b (seems about right IMO). There is likely to be some dilution through the financing process which will bring the SP down a bit - perhaps $1??
It is worth noting that the DFS factored in a FOB price of US$743. As we know, spot prices have been closer to $1250 lately, but let's assume we get closer to 1000. 1000 represents a 34.5% increase on $743. Assuming all other things are equal, we should see a 34.5% increase to the SP based on the increased sales price, and in this scenario we get $1.56 per share. This does not include any additions for fines and whatever gold potential we have. If we factor in fines, we could add 10c per share if earnings are valued at 20x (I have worked on 6m per year for fines)........So perhaps a SP of around $1.60 is achievable when we are in production - BUT, markets value producers at their earnings multiple when there is assured ongoing earnings. Once CXO can demonstrate that our LOM goes well beyond 10yrs (I would suggest 20), then we should see our SP represent this. The next step is getting the off takes, finance and FID, and then it is a matter of sit, wait and observe. If CXO can achieve their stated AISC then we are in the money!
GLTA
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