I think a typical total cost for silver miners is around $10/oz USD or let's say $11/oz AUD. Having said that the nature of CCU's silver deposit indicates that it will be somewhat cheaper than average to mine and extract so perhaps around $10/oz AUD. The plan is to mine 3.3 mil. oz per year. The cost of setting up the mine is around $20-25 milj. so taking this cost into account and assuming they are indeed ready to mine in 2011 we are currently trading at a p/e of about 2 for 11/12 (assuming 100% dilution for the cap raising in mid-2010). At an inflation adjusted ATH for silver (around 140/oz AUD) we would be trading at a p/e for 11/12 at around 0.15. When silver catches up with gold and trades at a non-inflation adjusted price around $50/oz AUD we would be looking at a p/e for 11/12 of around 0.5 (again assuming 1005 dilution after cap raising).
CCU Price at posting:
32.0¢ Sentiment: ST Buy Disclosure: Held
