This version is based on an after tax calc allowing 30c in the $ company tax rate:
Assumptions:
1,750,000,000 shares on issue ( includes all current options)
Costs $9 per tonne ( conservative as LYC argues $7 )
Basket price $108/kg ( then apply a 5% reduction in basket price that applies for early customers who sign up to long term contracts )
PE 10:1 ( the basis for this multiple is the likely 10 year supply contract for the Sojitz deal in the LYC announcement dated 24th Nov10 effectively guaranteeing earning for this period )
$10m HQ costs pa
Tax Rate 30%
Valuation scenarios:
11,000 tonnes mined earnings 41.6 cents per share. PE 10:1 share price $4.16( ...might have to start the splinter $5.95 club club!! )
22,000 tonnes mined earnings 83.6 cents per share PE 10:1 share price $8.36
The market will value a company on a P/E basis somewhere between 8-15 times earnings if it was a public company. You are better off to use a conservative price to earnings ratio. 10 just equates to locked in customer contracts - sojitz TBC.
CONCLUSION:
Traditionally 3 years out earnings is what is used as a harvest time frame for valuation purposes so that puts us in the $8 range once the 22k volume is "locked in" and the LAMP delivered assuming basket price stays at $110/kg.
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