I've just been reading the Annual Report, and on page 1, there...

I've just been reading the Annual Report, and on page 1, there is a statement that:

"The Kinsevere Stage II SX-EW project, which is almost completed, should produce 60,000 t/y of LME-grade copper cathode at a total cash cost, including royalties to Gecamines and the DRC Government, of $1.00/lb Cu, at a copper price of $1.43/lb, based on the March 2010 NI 43-101 Technical Report."

A bit of a confusing statement, but if we take it that the SX-EW plant can produce LME grade copper at $1.43, and hence assume an operating profit of around $2.50/lb of copper. Then this equates to an overall operating profit of $2.50 x 2,200 lb/tonne x 60,000 t/y = $330 million.

Take off say $80 million for interest, debt repayment, exploration etc, leaving before tax earnings of $250 million. Divided by 166 million shares (fully diluted) equals approximately $1.50/share. A P/E of 7 would give AVM a price of around $10.50.

Can anyone see any fault with this reasoning?