Thanks champ for that. i have gone through quarterlies . what i meant was any assumptions of forecast capex.
Although one can apply a P/E to value a company , i prefer valuing gold companies on a free cash flow valuation. The operating cash flow growth is huge no doubt. Barrick recently in its annual reports has started including free cash flow in its balance sheet. So lets say TRY are to produce 100000 ounces pa at average realised price of 1400 , that gives you 140 million. If we assume that capex is same as last two years (50 mill) that gives you a free cash flow of 90 mill. So troy would be generating a free cash flow of 90 mill per year which is approx one dollar a share. If we keep this as a constant assuming no increase in gold price , no increase in capex, FCF over next 5 years is 450, that is greater than current market cap back in 5 years or a CAGR of 16% . That is a price to FCF ratio of less than 1 at todays price. Sprott and john embry say that buying companies at 2-3 times operating cash flow (not FCF) tends to be a winning proposition. and TRY fits that proposition. Undervalued any way you look at it and of course if all factors mentioned above stay stable. Now the variables: Does anyone believe that mine life is an issue? Does anyone believe that capex may blow out at any point ?
TRY Price at posting:
$4.53 Sentiment: LT Buy Disclosure: Held
