it is interesting that explorers that have identified deposits can trade at a higher $mc/ounce in the ground, and their share price be unaffected by negative earnings because they don’t have any! Not to mention no established operations.
if you assume Regis generate fcf of $225m per year for the next ten years (zero growth) and interest rates average 3% (pretty conservative from current position) you roughly arrive at fair value of $2b. Which represents a 5% return to shareholders from today until then.
or if you like, you could say Regis overpaid for Tropicana by 10%, meaning today the rest of the business operations can be bought for ~700m.
cold comfort for owners at higher prices but IMO todays price is good….
RRL Price at posting:
$1.69 Sentiment: Buy Disclosure: Held
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