Valuation of uranium takeovers is normally based upon million lbs in the ground multiplied by a value in US$ per pound. This post is not to put up numbers, but to give a handy rule of thumb to convert these two values to a share price in A$.
Rule of thumb: @ US$6 per pound - divide by 30 @ US$9 per pound - divide by 20 @ US$12 per pound - divide by 15
Example: Zone 1 + Ida Dome = 170 million lbs indicated + inferred. If that was the only uranium taken into account, and you assumed the lowest possible value in $ per pound, what A$ share price would that be?
Answer: @ US$6 per pound - divide by 30 - share price should be 170/30 = A$5.67
Example: If you assumed that Zone 1 + Zone 2 + Ida Dome = 300 million lbs, and you thought that with the excellent grade, cheap extraction and potential for further resource upgrade a value of US$12 per pound was justified, what A$ share price would that be?
Answer: @ US$12 per pound - divide by 15 - share price should be 300/15 = A$20
Assumptions: exchange rate US$0.80 = A$1
EXT Price at posting:
$6.14 Sentiment: Buy Disclosure: Held
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