projected income and expenses , page-9

My calcs, posted previously:



Subject: LYC research Likely earnings

Assumptions:

1,750,000,000 shares on issue including options,
$9 per kilo production costs and admin ( company argues for $7) Drilling costs will result in greater resource which will up share price.
Based on sales at $30 per kilo.
Add 12.5cents per share for each additional $10 per kilo achieved for processed product above $30 per kilo.



Based on 11,000 tonnes in year 1= 13.2 cents per share @$30
@$40 = 19.5 cents per share
@$50 =25.7 cents per share
@$60 =32 cents per share
@$70 =38.3 cents per share
@$80 =44.6 cents per share


Based on 22000 tonnes in year 2=26.4 cents per share @$30
@$40 = 39 cents per share
@$50 =51.5 cents per share
@$60 = 64 cents per share
@$70 =76.5 cents per share
@$80 =89 cents per share

So on a PE of 10, even if RE's drop back to $30 we are looking at 26.4 cents per share in 18 months time. Hence, $2.64 valuation if RE prices drop by in excess of 50%. It is more likely thaht RE pricing will be higher than $30 but cost of manufacture for many mines is approx $30 so it is unlikely to ever again get that low. In my opinion, demand will accelerate as production becomes available and we are more likely to see $40, $50 or $60. If China tries to control pricing it will possibly be higher again for a number of years. The risk reward scenario is on the side of the current share price.