I am not predicting the share price- I have no idea what the share price will be tomorrow although most days have been red for a while. The points I made were:
1) what profit/cashflow will SLR earn at a 400k ounce production / AUD$1,600/ounce gold price? We are looking at $200m in NPAT and on a PE OF 10 that is a $5 odd share price- that is an assumption rather than a prediction.
2) if gold price goes crazy (I am a believer rather than a non-believer) each $100/ounce price increase adds $40m to the NPBT on 400k ounces of production. No hedging will impede future gold sales. A gold price of $2,000 will add $160m NPBT pa. A gold price increase itself would support the current mkt capitalisation.
3) When production ramps up further as resources are developed the numbers just get better.
If you believe in gold and believe that SLR will ramp up production at a reasonable cost than SLR looks like a very undervalued stock. If you don't hold those views it is not a buy?
SLR Price at posting:
$2.37 Sentiment: Buy Disclosure: Held
