current value, page-7

LS
"So, yes there is risk but imagine the upside if production went to 600,000 ozs and the profit margin went to $600. We would be talking about nearly a $1 per share"

According to my calculations if SLR produced 600,000 oz per annum and Gold was $1700 AUD it would generate a NPAT of approx $230M so the SP would more likely be $6.00 and not $1.00 per share.

This is why I like the stock, yes its risky as the current margin is only about $250-$350 per oz but the leverage to the Gold price is huge.

Even at 250,000 oz per annum and Gold at $1500 AUD SLR should generate approx $55M NPAT which would give it a PE of only 5.9 which is really low for a gold company.


Personally I don't see Gold going much below $1350 oz AUD for two reasons:

(1) Most companies will cut back production at this level as many pits will become unprofitable. Lower supply will cause the Gold price to go up.

(2) You now have approx 2.5 Billion people in just China and India and as they get wealthier they all love buying Gold.
With Brazil, Africa, Russia and several other huge countries also starting to get wealthy I see demand for Gold only getting stronger.
I live in Thailand and as soon as Thai's have money they buy Gold.