The market would likely value this company, as most miners and juniors, rather on a DCF basis than on a PE basis. This might give a somewhat more sombre valuation, but nonetheless significantly north of the current price. A quick calculation on a DCF basis with the following parameters: • Annual production: 2,560,000 oz • Mine Life: 10 years • Project Financing: $11m • Cost of production: $7/oz • Royalty on gross revenue: 5% • Tax on net profit: 30% • Discount rate: 10% • Shares on issue: 206m • POS: US$32 ________ Gives a NPV per Share: $1.05 Incremental value increase 4.5c / $ of POS
Calculations might need some tweaking, but this gives a gross ballpark figure, and the market roughly seems to agree with this assessment. Upside is clearly in the POS and once production has been established and confirmed as sustainable. Long term holder.
CCU Price at posting:
71.8¢ Sentiment: Buy Disclosure: Held
