are we paying too much for this stock?

Remember, SMM not only has Uranium but a separate portfolio of valuable materials.

I do believe, we have just about paid for this portfolio with the current share price therefore having the Uranium for virtually nothing still.

I don't have any objection against some consolidation of the share price to strenghten it (and hence prevent a possible small retracement), but the demand remains and there wll be interest from overseas as well.

It is this post which gives a very good background:
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Subject re: + on the back of an envelope +
Posted 04/02/05 21:08 - 220 reads
Posted by stolwyk
Post #502907 - in reply to msg. #495626 - splitview

I need to look deeper into the resources of SMM but just for now, a very rough job will suffice, I think.

1. ALL ASSETS BUT EXCLUDE URANIUM:
SMM has inferred resources of 200 mill tonnes + of iron ore (FE=51%), 50 mill tonnes of Phosphate rock (All inferred) and an undrilled gold zone of up to 10 km.

It also has a base metals project with some initial promising drilling results.


Capital: 152.9 mill shares, share price 25 cents, a market cap of about $A38.22 mill.

I would say there could be a considerable value in the iron ore for starters.

Assume that all this could be worth investing in at 25 cents a share, and one can then have the Uranium free.

++++++++++++++++++++++++++++++++

2. URANIUM.
There are about 50 mill lbs of indicated and measured U3O8 and 75 mill lbs of inferred U. SMM holds about 70 mill lbs of that

The plan is to double that by drilling. Let us assume that they do manage to expand the resource from 70 mill (Their share) to 120 mill lbs.

Current spot is $US21/lb and contracts about $US25/lb. Price is increasing. By the time they are starting a mine -if they are allowed to- spot could be say $24US or say $A31.16 or say $A31/lb (0.77).

The resource is then worth: $A3.72 Bill. Market Cap is $A38.22 mill (See above), so, per $1 market cap we would get $A97.33, say $95. Nice one, high number!


Ideally, another 6 months are needed for drilling part of the gold resource; one has to wait till the wet season is over.

This is of course an on the back of an envelope exercise but it may give some confidence: Apart from Uranium, SMM has some excellent projects IMHO.

This is a speculative stock.

Gerry
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks.