I tent to agree logically the market market does not always...

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calcrisktaker

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19/06/16

10:21

Post #: 18066518
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Originally posted by Quicksilvasurfa ↑

I would only add two things to this.

1/ I would not be using numbers from what the board said at a general meeting, I would be trying to work out actual cost so far from the cash flow reports.

2/ There is absolutely no point in using a market standard PE ratio, or even comparing PE ratio's from other diamond companies when trying to work out a valuation for LOM. One of the biggest factors that goes into deciding a PE ratio for a mining company is life of mine.

The best way I can think to explain this right now is, if a company was making $100 million per year, for 2 years production then the PE ratio would be extremely low as the company only stands to make $200 million over its life, therefore its market cap would be low. I mean you are not going to have a company that only stands to make $200 million in its life, valued at $1 billion.

However a company that was making $100 million per year for 15 years would have a higher PE ratio and market cap as they would stand to make $1.5 billion over the mine life therefore valuing that company far higher.

As far as the kimberlite goes, well it would definitely add some value to your valuation, but until it is actually found and proven, that value would be negligible.

To be honest, I have no idea what the current mine life for the alluvial's is, so I wont attempt to put a value on the company.

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I tent to agree logically the market market does not always follow such path.
One of the two miners mentioned in my original post is valued at roughly 70% of reserves they have. Can't remover which one.

In this case investors either have over valued the coy or believe that life of mine can be extended by further discoveries.

LOM Price at posting: 34.5¢ Sentiment: Buy Disclosure: Held
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Last 4.0¢		Change 0.000(0.00%)		Mkt cap ! $11.60M

Open	High	Low	Value	Volume
4.3¢	4.3¢	4.0¢	$12.21K	301.5K

Buyers (Bids)

No.	Vol.	Price($)
1	1220	4.1¢

Sellers (Offers)

Price($)	Vol.	No.
4.4¢	112000	1

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No.	Vol.	Price($)
1	1220	0.041
1	150000	0.040
4	537871	0.039
1	260000	0.038
3	197211	0.036

Price($)	Vol.	No.
0.044	112000	1
0.045	8400	1
0.046	181600	2
0.048	150000	1
0.055	30000	1

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I tent to agree logically the market market does not always...

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I tent to agree logically the market market does not always...

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