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2.7¢ goldoz limited

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Juno

3,881 Posts.

25/10/17

13:56

Post #: 28182966
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Originally posted by Fishinnick ↑

I think its very hard to put an SP value on MUS at this stage. I don't believe one can value it as you have done, this is because the cashflow is needed to be use for development etc and a 10 yr JORC. Then down the track looking at it from a LT view the revenue achieved after the exploration expenses have been covered will be about 60%. However you can't just value it on cashflow or sales because as the asset gets turned into JORC 10 yr then more of the SP value becomes the asset. Even at this stage the market will start pricing in the ruby asset because they are recovering rubies at a good rate over a good % of the licences and its most likely they have a good asset.
One should also think about the size of the market because its not a market like gold, silver etc where you know you sell everything you can produce. This ruby market has limits, Aparently GEM supplies 50% of all rubies sold to the market but the market is growing, GEM have turnover from memory US$280 mil to date since 2014, with this year being a record year bringing them US$170 from memory. If thats 50% how much can MUS expect to wiggle in on? In all the presentations they say tapping into a $2 billion market, this is misleading imo because the market MUS is going to be selling into is the rough stone market.
We really need to know the true average price of MUS carats, how many they can sell each year and how many carats in the ground, otherwise i agree with Tibbs - the market values it.
So what i do is try and get a feel of what the market thinks which isn't easy and full of hazards, i try and work out what the market is expecting, at this time in this case it seems the market is expecting MUS to achieve an average ruby price of over $100 or so, other things i consider are why did Arena a big hedge fund sell out before the auction if its such a no brainer the SP is going to 30c, the volume would be there after the auction if that was the case but instead they sold into the thought of the auction rather that its result, which is the same as me. There are also other sellers around, like yesterday there was sellers all day long and today still some. There might be some FOMO towards the end of the week im not sure. Sentiment can cause big swings in these little mining companies from my experience they can get way overvalued and way undervalued like MUS was when you first bought, this can happen many times through the development cycle purely based on sentiment. ( What the market thinks and what then gets announced) So my conclusion is if the auction disapoints say 40-60 av the SP will get smashed, may even see single digits, if it really does surprise like well over $100 av then it could spike briefly. Its all an educated guess. Obviously i think the market will be disapointed, one reason is all the high expectations that seem to be on these boards, your pe ratio and formula and other peoples that is based on numbers which aren't correct to start with, for your 5 yr outlook you should only use 60% of the revenue from your high low average because after expenses are paid for thats all MUS will get as cashflow but you should also atribute some value of the asset into the SP too imo. The next couple of quarterlies will really be essential to be able to come up with an SP target imo, in the meantime i expect volatility. All just my opinion Dyor.

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MUS Price at posting: 16.0¢ Sentiment: Buy Disclosure: Held
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