valuation rule of thumb, page-10

10 cents

What BB has done,just simplified the maths to get some constants then apply the variables to get a quick estimate.

As BB had to go to work, best he explains later,

Also have a look back over thread for 6mths and you see some good posters give logical guesstimates based on facts.

Heres how I do a quick back of evelope, which is basically pretty much the same as what BB has done in a fashion.

Just remember that the price in ground has a lot of the variables built into it on a case by case basis,

examples maybe and not excluding other factors,

* explorer /jorc/ producer/mine life

*Infracture ie established or extra capex and time factors

*Cost per lb to produce

*PPM

*lb in ground (size as in 10yrs or 100yrs ??!!!)

*strip ratio

*potential to increase resource

*Soverign risk/political risk

*long term market price

*long term contracts/ customers

*industry growth/demand

*economic climate ( seems to be more merging and consolidation at present in general market due to GFC)

*royalties

*tax

*enviromental
*etc etc

AS you can see above EXT ticks the boxes ;-)))

so say as an example only and applies to any u stk in general as a rule of thumb as I use

500 mil in ground still have Z2 Z3 Z4 AND BEYOND
250 mil shares
$5 or 10 or 15 us in ground ` `
$AUS = US/AUS ie 1/(.8)= 1.25 (this is variable)

500mil x 10 /250mil = $20 us (not much premium here IMHO)

I read a lot about spot price, but it counts for about 10 -15% of the market at best. at present I like to use $70us
as this is closer to long term average

When considering these take overs, consider how much the pursuer is really going to gain in the long run, I dont see much calc's on that, but I can tell you they are way in front over time. So if there is a take over offer in the near future,it will be very interesting as to how they get their figure as a HUGE PREMIUM would have to be on the table for the unknown resources IMHO


I don't think rio want to see this slip by.
But another player may come into a partenership that could finance capex and also be the long term customer, and co would be debt free.
eg china or/and areva ?? maybe


So if no take over then how would the analysts value this going forward ?? then a whole lot of new unknowns come into play. ie time to produce and lbs per yr. share dilution via partenership.dividends etc
All very interesting. The EXT story is novel in itself with all the different plays.

thats just my musings on a grey/dull Sunday afternoon.
the next 6 mths should be interesting.
All looks good