get ready for an upswing, page-4

Well, here's the thing...I always look at cash flow generation when I think about valuing an enterprise. I tend to disregard things like net profit, because you get crazy (or is that Krazy) things like amortisation which are functions of accounting standards which make zero sense to anyone with a brain. That is, you amortise the purchase of a mine, which is commercially growing in value and call that an expense...makes sense...NOT.

So, cash flow in 09/10 was $99m net from operating activities.

I tend to think value of an enterprise is about 10 times maintainable cash flow...does that make sense??

For a miner you then have to look at reserves and what it is costing to replenish those reserves. But, alas, MCR's reserves are growing.

You then look at debt and net cash position...no debt and $100m + in the kitty.

Market cap is $360m. Take off the $100m cash, and you get $260m net valuation on something which produced $99m in free cash flow last year, nickel prices are rising, nickel stocks are falling, their reserves are rising, and they are drilling for the motherlode and sounding pretty confident + they have diversification projects on the go.

Make your own conclusions, but I say this is half price (or less) every day.