Based on the strong correlation between cash flow and share...

Based on the strong correlation between cash flow and share price performance (see my post in gold and macro thread) I used data from Goldnerds and added some calculations to extend the data analysis. I calculated the EV/cash flow multiple for each producer and used it as a relative valuation measure to see potentially how SPR looks alongside other stocks. Be careful as this is just one metric and is far from perfect but is probably a much better one than just using EV to resources/reserves and production that most stocks put in presentations - this one at least attempts to assess profitability.

This is far from a perfect metric as it uses cash flow derived from current POG ($4,641) from a week ago less future AISC (from guidance) and future production (from guidance) (note future production and AISC maybe from different years ie not 2026). AIC would have been better but the majority of companies do not disclose it.

I have also added reserve life of mine which is important noting that a reserve denotes the gold can be economically mined. The average mine life is 9 years for the first table excluding SBM and median is 8 years.

I have assumed for SPR a reserve of 1.7m Oz which may or may not be too high as it is the best estimate we have from discussions with SPR team and data publicly released. I have looked at scenarios of production of 200k Oz and 250k Oz and AISC of $1,500 and $1,750. These may or may not be too high. The reserve mine life of SPR on this production is 9 or 7 years not far off average/median. Based on the metrics of other stocks a relative valuation for SPR around the average/median valuation seems appropriate (a case could be made for a higher valuation due to its lower costs but I am not sure I agree with this view).

The results excluding the majors and African producers are set out below and suggest that SPR has upside of 50% to 100% in its price relative to other producers by the time it reaches production assuming little is added to reserves in the next year or two (possibly a pessimistic assumption). If all gold stocks have potential upside of 50% (see my other post) then SPR upside is potentially 80% to 160% over time.

Some comments on a few stocks - EMR is an outlier but it plans to at least triple production in the by about CY 2027 so its valuation takes that into to account to some extent. If the higher production was taken into account its EV to cash flow would at least halve (notice from the second image how the EV/cash flow ratio drops substantially for CMM as its future production increases by over double). OBM looks fairly valued but considering its low reserve mine life of 1 year, on this metric it looks very expensive. The majors have very life reserve mine lives of 20-30 years (see last image) and so rightly have a higher valuation on this metric. CYL and RRL with a mine life of 4 or 5 have a low valuation relative to other miners with a longer mine life still look somewhat undervalued but not as much as the EV/cashflow multiple suggests compared to the average or median (average in unweighted). GMD has a mine life of 17 years which is long and accordingly is rightly valued more highly than other stocks. SBM is an outlier on mine life but its has had looks of issues.

A note on RMS - its look cheap on the chosen metric - however given it sugar hit is going to run out and its AISC is going to be a lot higher then I consider it is about fairly valued relative to other stocks. GOR seems a bit over valued. On this metric the only stock that looks cheap is VAU and probably ALK due to its much longer mine life.