Just something to be aware of when quoting silver equivalent grades and resources. Very few people are aware that as the silver price begins to outperform the other metals on a percentage basis, then that resources grades and resource size as measured in silver equivalency actually drop. The only project that will not drop is a 100% silver project. ILTs targeted resource is potentially 43% silver, 29% indium and the balance lead/zinc.
As an example, ILT's current silver Eq resource grade is 81.1g/t and the silver Eq resource is 261.8M oz at current spot prices using ILTs 100MT resource target with the highest grades provided. If I change the silver price to $50, then the resource grade drops to 62.2g/t and the silver Eq resource drops to 199.8M oz. Now, I have not changed the price for indium/lead/zinc to highlight what I am trying to point out, but I think we are all after the silver. Now, if you believe that indium will outperform silver on a percentage basis, then the silver Eq oz may reduce to a lesser extent.
Another thing to be wary of, is the fact that my grades may differ to what the company is reporting. That is the silver equivalency disparity again. Take a good look at the metal prices being used to calculate the silver Eq grades and resource. From my experience, gold & silver values are normally significantly understated and the other metals values overstated.
Now noting that ILT do not have a jorc resource, the below table is just pie in the sky but does show what could happen if ILT are able to deliver on their promised resource. Now, the valuation upside is a distinct possibility if a 100MT jorc resource can be delivered, but the share price upside is highly dependent on the amount of share dilution that occurs leading up to the jorc resource being released. As an example, most companies I track are around 300% upside or 300% undervalued using the same metrics.
The US$1Ag/oz and US$30Au/oz are fair prices for inground resources as determined by Don Durrett. I have added US25c for base metals per silver Eq oz, just to provide some valuation for those metals. In ILT's case, I have included indium in the base metal calculation because indium is selling for less than half the silver price on an oz basis.
I researched the low $30 gold price thinking that that values gold on a 30/1 gold/silver ratio which in my opinion severely undervalues gold deposits but was surprised to find a recent article that stated that over the period 1990 to 2013, 56% of takeovers for undeveloped gold resources were priced below US$4/oz. Indium is shown as gold percentage in the below spreadsheet
ILT Price at posting:
23.0¢ Sentiment: None Disclosure: Not Held
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