Howdy krugerrands,
It's a tough thing to try to put numbers to.
No matter what we think is "reasonable", the market always seems to mess up the plan!
Regarding the P/E of 15, I think that has generally been the (historical) average for say the S&P 500 or similar...?
It's merely ballpark though - I mean, look at Tesla or Uber for example.... absolutely ludicrous P/E ratios, with their "valuations" (via sp) simply based on potential at some point in the future. Sometimes it just makes no sense.
Anomalies aside, imo it is relatively reasonable to target a P/E of around 15, but as we know, the market is often unreasonable, and could easily see 10, 25 or even 50, depending on how forward looking, optimistic (or otherwise) it feels like being. That's part of the attraction isn't it?... The unknown behaviour of the rest of the market?!
Some might see earnings of $100M per year and ballpark a $1.5B valuation at some point. Others may think product prices will be squeezed hard (e.g. >>$20k/t) and therefore go higher again. Others may anticipate additional project/s or Rincon expansion (e.g. "another" 10ktpa as you noted). Everyone has their time horizons and risk appetite....
Imo it requires a very "stable" company (consistent operations/earnings etc) for the sp to reflect say 10 or 15 P/E at a relatively steady level.
This company has such broad potential (expansions etc), and this sector has so much growth and uncertainty (e.g. how high will pricing go when demand gets really hot over the coming few years, and how long will that serious supply shortfall last..?)..... things could end up very different to what is "expected" in a PEA or feasibility study. Imo the risk is getting increasingly asymmetric to the upside (higher product prices and higher demand than most think), so the future (rest of this decade) will be far "better" than most think.
Anyway, what this all boils down to, imo, is that it is very difficult to try to estimate where this will go, but it is worthwhile putting together some estimates (low/med/high for instance), in order to gauge what value may be here. Everyone's gauge will be different (and should be), as (for starters) their risk profile and investment horizons will likely not align.
Imo, a ballpark estimate like proposed earlier indicates that there is perhaps many bags here over the coming few years and this is reason enough to hold a position (for me anyway).
FWIW I got interested (and started accumulating) in 2016, when I saw that the company was actually building serious ponds and prioritising working towards demonstrating production with an industrial-scale pilot plant - instead of pumping millions after millions of dollars into lab testing, drilling, study after study etc etc like most others do. This was relatively unique and has put the naysayers to rest (too much magnesium anyone?)... after all, if we had done the lab thing and then tried to jump to commercial plant funding, they would have continued with "yeah well you can't process viably at a "real" scale in the "real world", so there is no chance of success". As it is, we have demonstrated scalable processing and have solid indications of equipment, energy, reagents etc etc to inform commercial production requirements and costs. Excellent approach.
In any case, we are now at the pointy end, and after 5 years here (for me), we'll soon see the 2ktpa plant in action and have our ducks lined up for the 10ktpa operation.
The traders hate waiting (as seen by their impatience and whining here!), but those of us in the mining game realise that NOTHING happens quickly and what we have here is a golden opportunity to make some serious coin and be part of the new era.
IMO
DYOR
GLTALTH
Whoops that post was far longer than I anticipated
Cheers
(20min delay)