For mine, patience is the key here. OMERS back above 5% is a...

For mine, patience is the key here. OMERS back above 5% is a good thing. Comparisons are obviously valid but AVM is markedly different in that we're about to turn the switch on Kinsevere. The pictures of bundled cathode look fantastic. I've been banging on about the outdated financial model for a while, but our financial model is based on $2.44/lb ($5400/tonne) and LME is currently at $3.88/lb.

Here's the table from the "current status" part of our homepage.

Expansion Construction of a 60,000 tpy SX-EW copper cathode
Capex(E) $400 million
IRR2 36%
NPV2 $473 million
Payback2 3.6 years
Commissioning(E) Q2 2011 plus 4 to 6 months of ramp-up period
Commercial Production Q3 2011

1. Royalties: 2% NSR to DRC Government and 2.5% gross to G?camines.
2. Estimates are based on the total Capex of $400 million, a 10% discounted rate and an average copper price of $2.44/lb Cu.

These are great project metrics. Also, the plant should be able to run at 10% above nameplate capacity. With 65k tonnes of production and a more realistic Cu/lb assumption, the NPV and IRR go through the roof. Some heat has come out of the Cu market however all serious commentators are forecasting significant medium-long term supply constraints.

By my calcs (always DYOR - i'm no numbers man), using a Cu price of $3.73/lb, 65k tonnes per year, total costs of $1.33/lb and assuming full production from 1 July 2011, the PE for FY2012E is less than 3. PE discounts come from DRC sovereign risk and Trafigura overhang. IMO, it's eminently reasonable to expect a PE of 8 x FY12Expecteds, which gets us to $15-16.

IMO this stock will be re-rated significantly when ramp up is complete. We all know what's coming, we just need to maintain the faith. On the flip side, some may view this as a pretty solid buying opportunity. For mine, this seems to be an absolute no-brainer.