Valuation disconnect clearly evident Despite recent gains, equity markets continue to excessively discount explorers and in particular small caps with poor liquidity and little or no asset diversity. This can be seen across multiple analyses including comparisons with DCF-risked resource valuations, analyst consensus target prices and, probably most significantly, industry terms determined from farm-outs. Large price multiples on offer even on a risked basis When considering net risked resource valuations we see substantial upside to current share prices across the peer group, although not surprisingly there is wide variability in our results. Pura Vida Energy and Tower Resources are probably the standout names, with Pura Vida offering 20x upside (even on a risked basis) from its Moroccan activities alone, while Tower is targeting an eye-watering 9.9bnboe (gross) from a single well (Welwitschia-1).
PVD Price at posting:
44.5¢ Sentiment: LT Buy Disclosure: Held
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