current and future valuation

To enable any precious metal investors to do their DD on SVL and their prospects, i thought i'd put up a recent post of mine.

I have taken the time to write up a valuation of SVL's Webb project based on Gross Metal Value and their place in the delineation cycle.

As such a base silver price of $5/oz is used in this calculation. This is the standard price used by hedge funds in assessing precious metal juniors. Gold is usually given a base value of $50/oz.

The key questions in relation to size and grade to ask;

1] How many potential tonnes of rock are there?

2] What is the gross $dollar value of the silver contained in each tonne of rock?

Please refer below for tonnage, potential tonnage and its corresponding valuations.

I will then compare it to the relative stock price of the company. It gives investors an idea of what SVL has to offer with their current resource estimate and new exploration targets.

Any questions, please feel free to ask.

Once again, please note that i utilised $5/oz of silver as SVL is a precious metal junior. As the management delineate their resources and hit their targeted 50 million ounces, a higher base case will be factored in.

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Tonnage estimation [according to their news releases]

Note: The objective here is to convert the different types of reporting into a dollar amount for the rock unit mined.

Scenario 1: Current Resource Estimates indicate 1,233,000 MT of rock

Scenario 2: Current Exploration target of 7,000,000 MT of rock

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Scenario 1:

Current deposit reported in Metric = 1,233,000 MT @ 256g/t and silver at $5.00/oz [exploration junior]

Current in-place grade = 256g/t
Coverted to oz/t = 256/33.13 = 7.73oz/t

That's $38.65 rock! That is, each ton of rock gives $38.65 of Silver [7.73oz/t X $5.00]

Therefore, GROSS METAL VALUE of the potential deposit;

1,233,000 MT X $38.65 = $47,655,450 dollars

Shares currently on issue = 135,105,168 shares

In ground value = $47,655,450 dollars

Estimate value per share = Approx $0.35 per share on GROSS METAL VALUE on just $5/oz of silver!

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Scenario 2:

If the exploration target is reached, deposit reported in Metric = 7,000,000 MT @ 256g/t and silver at $5.00/oz [exploration junior]

Current in-place grade = 256g/t
Coverted to oz/t = 256/33.13 = 7.73oz/t

That's $38.65 rock! That is, each ton of rock gives $38.65 of Silver [7.73oz/t X $5.00]

Therefore, GROSS METAL VALUE of the potential deposit;

7,000,000 MT X $38.65 = $270,550,000 dollars

Shares currently on issue = 135,105,168 shares

In ground value = $270,550,000 dollars

Estimate value per share = Approx $2 per share on just GROSS METAL VALUE on $5/oz of silver!


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Comments:

Please note from the above that the OPEX costs for a polymetallic mining operation are relatively high compared to a standard mining operation. However, if SVL can get their head grade [256g/t] and intercepts consistent along their strike and at depth, then one can see upside in their current share price of 17cps.

It is important to observe that this is a gross metal value of SVL's WEBB project and CAPEX and OPEX costs will need to be factored into the overall economics when feasibility studies are done. However, having said that, i have not included the by-product credits into the equation which would provide added upside.

Ultimately, SVL's head grade is giving their project great potential profits. As such, it's consistency is crucial for the economic viability of their project. Their grades are really at the top end of silver plays on the ASX and if they get close to their targeted 50 million ounces, the share price will be in the multiples.

Current share price of 17cps is severely undervalued. Base case price should be 35cps with 1,233,0000 MT @ 256g/t. And that is on $5/oz silver.

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Note that i factored in the following;

- Head grade of 256g/t
- Silver base price of $5/oz instead of the current $31/oz

The above is just my opinion and calculations on SVL's POTENTIAL and should not be construed as ADVICE OF ANY SORT. It is a GROSS METAL VALUE CALCULATION based on factors present but will obviously change during the course of their drilling campaign.