What does everyone think a fair shareprice valuation for 2011 would be?
Here's my thoughts:
Assuming for 2011 at Lamaque we are able to get good quality grades as well as solid tonnage, a conservative estimate of total ounces (barring no major setbacks or delays) produced out of Lamaque would be 70,000 oz. This of course is less then the roughly 84,000 oz Century is planning for, but like I said its a conservative estimate based on past performance. For the sake of this exercise, lets assume commercial production is declared at the end of Q1 2011. This gives us 3 full quarters of recognized revenue from Lamaque.
We can expect higher costs out of Lamaque in the beginning, so lets also say Century is able to realize an average net profit per ounce of $450 ($1400 PoG - $950 cost per ounce). Thus, $450 x 52,500 = $23,625,000 in profit from Lamaque.
With San Juan, we can reasonably conclude that it will continue to be its reliable self and generate a minimum of 20,000 oz for the year. Since costs out of San Juan are lower, $658 per ounce in Q3 2010, lets assume they can get costs a bit down to $650 for 2011 (which is conservative considering they're projected to be $550-$570 over the LOM). Thus, 20,000 oz x $750 profit per ounce = $15,000,000 profit from San Juan.
Thus, the total profit from Lamaque and San Juan combined could be $38,625,000 based on the above assumptions. This equates to $0.10 per share fully diluted.
At a conservative PE ratio of 10, this comes out to a projected shareprice of $1.00, a solid increase from our current levels.
It's all up to management at this point.
7 comments:
Must say your $1.00 estimate is conservative. After fiddling with my figures,records n my anticipated gold price come 2011, my thinking is $1.00 is the if-not-achieved-will-be-disappointing bare minimum. I allow $1.50 an achievable target going into 2011 n my dream figure is $2.00 likewise
Cheers!
Wingfong,
I agree that my estimates are conservative. Only using a PE ratio of 10 for a company that could potentially generate over $38 million in profit is highly conservative. A fairer PE ratio would be in the neighbourhood of 15-17 which would give us a shareprice of $1.50-$1.70.
Of course, I also used a $1400 gold price and conservative ounce predictions so in my mind aswell $1.00 should be our absolute floor.
Cheers.
I would tend to agree. Assume 24K oz out of SJ for 2011. Assume 80K oz out of Lamaque - based on the following: 1700tpd avg, 4.5 grade, 95.5% recovery. Gold @ 1300, cash costs 650. Take into account also 8000oz db payback and a pe ratio of 10. Share price $1.35.
this would be my conservative target; below which would be disappointing and (unless pog tanks) indicative of management shortfall.
Hi,
BB - 1.00 is far too conservative. What was not been included in the calculation has been our extremely large reserve & resource base (which may be expanded in a new 43-101) vs other producers who produce at this level and fact that our production numbers would still be in an "increasing" mode on annual basis so we really deserve a growth premium.
Dennis of GoldMinerPulse currently values CMM vs Peers at over 4 dollars based on resources vs. peers for a producer our size.
Granted that I do not believe we will immediately rocket to 100% fair peer valuation, I feel over 2 dollars is a more than fair target which would be a 50% discount off our actual fair value. If at some point there is a buy out attempt for us, then Dennis' projection is absolutely realistic considering how much GoldCorp overpaid for Andean.
We have the winning numbers on our tickets guys. . . it's a test of patience but I believe the reward will be through the roof when this smoke clears and everything all plays out.
RE
RE
Totally agree we have the winning numbers in our tickets. From all past material gathered, I am getting more n more convinced our resources is in a growing mode. As Prod05 said recently..'there are plenty of deep oz waiting to be discovered within the mine especially from 3500-6000 feet on the Lamaque half..there is a belief that the deep Lamaque main plug combined with the deep west plug could still host 2million oz alone. Lamaque mineralized system is a mesothermal system. As such, the grading should go higher with depth..'. We are current 6million oz n it is my belief that passing the 10million oz mark is a very real possibility!. And then how many junior can claim to have anything close? When have we ever seen such a cooperating gold price? By all logic n probability n assuming things go reasonably well on the mine fronts,I believe the SP have a long long way to go n surely much higher than $1. I am not pumping. This is my conviction n I will sit n wait.
I agree 2 dollars is a very conservative target. 1 dollar can be achieved within literally a few good days in a row when we just show progress and 2 dollars and beyond when we have reached and shown consistent steady state. Let's not forget. . as we have demonstrated before, there are tons of peers with less in reserves, lower grade, and riskier jurisdictions trading at or above 1 bil in market cap.
Have a great weekend all! We have the winning numbers. There are no other plays out there that are so undervalued and have as many "game-changing" upcoming events and announcements. I
RE
As a recent shareholder and follower of CMM I very much enjoy most of the chat that I read and find it both entertaining and sometimes informative. As a C.A. I have a particular leaning towards the financial side of things, as opposed to the engineering/mining areas. I thought I would add my pennies worth on the S.P. of C.M.M. looking forward to 2011.
Firstly lets take off the table the macro items such as a major retreat or growth spurt in the markets in general, large changes in the US, Canadian dollar exchange rate etc etc. Assuming the big picture items, which can and do effect the share prices of all stocks albeit sometimes differently, remain the same we also need to assume that grades and recovery rates too are not negatively effected by actual rates. Having stated some caveats I do believe that some writers are in danger of doing exactly what management has frequently been accused of in recent months and that is of being “over optimistic”. By setting the bar too high and creating the expectancy regarding the financials for 2011 i.e. the short term outlook we are not doing ourselves any favors.
Let’s look at another set of forecasts and assumptions. If we assume; the Lamaque revenues start in the second quarter, say 52,500 ozs for the remainder of the year, and Sao Juan 20,000 ozs and gold prices average $1,250 in 2011 gross revenues would come in at $90.6m. I’m not sure I understand fully the impacts of the Deutschbank arrangement but believe that CMM gets $561 plus US$88 revenue for each ounce and is obliged to deliver 8004 ounces in 2011. If this is correct then gross revenues would have to be adjusted downwards by $4.8m bringing them down to $85.8. Assuming a cost per ounce at Lamaque at say $700 for 2011 and $600 for Sao Juan then the gross profit would be $28.875m for Lamaque and $13m for Sao Juan before the Deutschbank adjustment.
The next big unknown is what will the corporate admin, deprecation and other overhead costs be. I note they jumped considerably in this last quarter. I’ve assumed $4 million a quarter as depreciation must be considerably higher after all the equipment purchases and improvements to the Lamaque mine. Take this $16 million off the gross profit and you have a pretax profit of $21.1m. Without any income tax on this profit, since I have no idea what any accumulated brought forward losses may be, and assuming warrants and options are all exercised based on 443m shares the FDEPS comes out at
4.8 cents a share or half of BullionBull’s forecast.
One should also bear in mind that if Lamaque’s production is only treated as revenue from the second quarter that we may not have a good idea of how things are shaping up until the second quarter’s numbers are released around August 2011.
Does anyone have a good hold on a p/e ratio of a company(s) that is a year or two ahead of C.M.M.?
This is just one more perspective which hopefully adds something to the communal pot.
Hopefully my lesser expectations will be exceeded and I too will not be disappointed. 2012 in turn will produce undoubtedly even better EPS. I am certainly looking at a 2 year horizon at this stage which I will modify as things unfold. My advice is that we should all treat ourselves to a dose of patience this Christmas. Oh and a very Happy one to all. Off to the beach now…
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