valuation, page-32

You sometimes have to wonder what hole people crawl out of!!

A poster joins Hotcopper on September 1, and only posts nonsensical garbage on BMN, one post on EXT and two post on PEN ... if you can call them posts!

These sorts of serial pests are not worth a second of my time. If others want to banter to them ... up to them. The IGNORE button for me ... he is in the bin wher he belongs!

For those who might be interested in my response. I only posted facts ... no opinions.

Fact 1] There IS NO oversupply of mined uranium ... in fact there is a significant shortfall!
Fact 2] The drop in Spot Prices has been because of the selling of physical uranium by hedge funds & investors due to the GFC ... the long term price has been largely unaffected.
Fact 2] New production that has & is coming online has been offset by the closure of a number of mines because of the GFC, the dwindling reserves of older mines, and the demise of Cigar Lake, which was to have been supplying uranium in the physical market by now on forward sold contracts.
Fact 4] Over the next few years, new powerplants will have to start procuring their uranium supplies early
Fact 5] New entrant India, along with a growing China want more supplies.

Those are the facts, make of them what you want. How far & how high the uranium market will go is anyones guess, but only a fool would put money on it going down!

As for the supposed "valuation" I placed on BMN ... how absurd! All I did was state the current EV value of both stocks, what are the drivers behind each stock, and the comparison. I gave no personal valuation, just a comparison.

The fact is that EV valuation is the standard industry method of comparing uranium stocks. Of course their are other factors and drivers. EXT has solid drivers pushing it to the head of the pack. It is delineating a great resources. It has RIO interested. And it has Dattels & Kalahari pulling the strings. Of course it should trade at a premium!!!

A premium to WHAT?

Well the current AVERAGE EV valuation of uranium stocks with JORC deposits is $3.05 cents.

EXT currently has an EV of $7.80. A significant premium, rightly reflecting their resource & corporate situation. If a takeover offer is officially made, then expect higher!!

BMN currently sits on an EV of $1.70 cents.... Lets forget EXT if that riles people .... compare it then to the industry average of $3.05 cents!!! Purely based on an AVERAGE, BMN should be over $2.00 per share!

However that is based on a BROAD average & includes stocks that have uneconomical deposits. It is more accurate to put BMN into a suitable peer group, and THEN average it. In a recent report (link below), Hanson Westhouse made this point and placed BMN in a goup of 7 pre-development uranium companies: Deep Yellow, Extract, Forsys Metals, Forte Energy, West Australian Metals, Xemplar, and Bannerman. This group has an even higher average EV, much better reflecting their more advanced status, and broader appeal.

Based on this group BMN should be trading closer to $3.00 per share. Am I out of line in comparing BMN to these lot? Well the Braniac on Ignore might think so ... But notice what Hanson Westhouse then say:

"Sector comparison Xemplar Minerals’ share price rose sharply last week after the company announced that it had begun drilling at its Cape Cross project in Namibia. However, Forsys, Xemplar and Forte were all trading at an average of US$3.65 per lb before the rise. This is the level which we believe to be the current market valuation of uranium in the ground in Namibia. .... However, we believe that both Bannerman and WME are substantially undervalued. Bannerman has suffered over the past year due to major shareholder, Opes Prime, being forced to sell 9.6% of the company last year. In addition, litigation with Savanna Marble CC and other parties, which could have meant Bannerman losing the Etango license, have impacted the company. These were only resolved in December 2008.
www.proactiveinvestors.com.au/.../090713_hansonwesthouse.pdf

By the way, since that report, most of these stocks have risen further, yet BMN has dropped, further accentuating the value presented in BMN.

I have stated before, and I am happy to go on record as saying again, that IMO, the very BASE valuation for BMN should be the broader industry EV average of $3.05, which equates to $2.00 per share. That is without any premium for
a/ being in what is IMO, the worlds best uranium district, Namibia
b/ having a more advanced status of development
c/ having a large tonnage, long-life resource

Besides this last paragraph which is what I consider to be a very modest & realistic opinion, all the rest of this post is a mere stating of facts. If people find that to be ramping, then thats up to them!

;)