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By Dennis Boyko
Created on: February 10, 2010
Current version: 0.2 April 8, 2010 -- added a chart symbol key.
Metrics have been updated with closing prices available on 2012-Feb-07.
Projected fair market stock price for Arian Silver Corporation is C$0.90. The actual closing stock price was C$0.375.
Based on the close of trading on 2012-Feb-07, the current and projected Market Capitalization per ounce of Silver Equivalent for Arian Silver Corporation, considering only the value of its San José deposit, were:
current market valuation: US$1.13 per ounce of Ag Eq.
projected valuation as junior silver producer: US$2.88 per ounce of Ag Eq. based on the Junior Silver Producer Valuation line evaluated at an average ore value of US$145.42 per tonne.
The expected change in valuation, as of February 9, 2010 is shown in the chart below.
The projected fair market stock price for Arian Silver Corporation is derived using the
estimated valuation at start of production of US$2.88 per ounce of Ag Eq (as derived above) and the following adjustments:
Capital Expenditure to reach production: US$1M -- see discussion below,
Risk Premium: 20% -- applied to the estimated capital expenditure,
Discount Factor: 5% -- discount between present and start of production (less than 1 year is assumed).
The discounting of the future silver and base metal prices after the start of production are already fully accounted for in the Junior Silver Producer Valuation Line.
The supporting model and the calculations used to produce the projected fair market stock price are detailed in Fair Market Price Calculations.
The capital expenditure estiamte is based on TABLE 8. ESTIMATED SAN JOSÉ CONTRACT MINING CAPITAL REQUIREMENTS on p. 37 of 68 of the Preliminary Economic Assessment Report dated June 22, 2009.
Since Arian Silver Corporation is expected to be in production in 2010, and given the relative size of the San Jose deposit compared to other silver producers, I believe it is reasonable to expect Arian Silver Corporation to become a fully valued Junior Silver Producer.
The other risk factors, as discussed in general terms in Gold Explorer-Producer Valuation Exceptions, are currently rated as neutral for Arian Silver Corporation.
This blog will be updated after the close of each trading day with current market data and valuation lines based on the close of trading spot market metal prices. Closure between current stock price and the estimated fair market stock price is expected over time. However, timing before the fair value of Arian Silver Corporation is recognized can't be predicted.
Silver Key:
AXR
| AUQ
| EDR
| IPT
| OK
| PAA
Mouse over a key symbol to read graph values
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Reasonable rates and excellent value.
Each company on the above chart is represented by its TSX trading symbol. The lower left hand corner of each box on the chart marks the company's Average Ore Value per tonne versus Market Capitalization per ounce of Silver Equivalent.
The Silver Explorer-Producer Valuation Hypothesis is based on the data driven observation that a company's market capitalization per ounce of silver (or gold) equivalent tends to rise based on the current valuation of the metals contained in an average tonne of ore.
The Silver Explorer-Producer Valuation chart is updated after the close of trading using closing stock prices, closing spot market metal prices, fully diluted share counts, and NI 43-101 resource and reserve disclosures.
Please see Silver Explorer-Producer Valuation for a discussion of the Junior Silver Producer Valuatoin Line. The Major Gold Producer Valuation Line is based on the Gold Producer Valuation Line as derived in the Gold Explorer-Producer Valuation blog.
This GoldMinerPulse blog is presented for the sole purpose of illustrating how GoldMinerPulse per company metrics may be useful in judging valuation of individual gold and silver mining stocks. This blog should not be considered as investment advise. Anyone using this blog should become familar with the GoldMinerPulse metrics and the underlying assumptions to access their usefulness.
The Junior Silver Producer Valuation Line is shown to be linear with respect to increasing ore value. This assumption appears reasonable for Arian Silver Corporation.
Arian Silver Corporation web site.
Arian Silver Corporation NI 43-101 Metal Valuation Report for the company metrics derived using the last close of trading data.
Canadian Insiders for insider trades on the TSX
StockHouse for a discussion forum.
StockCharts.com for price charts.
Sedar for all TSX regulator filings. Sorry but you'll have to navigate the Sedar site as they do not allow direct links to company specific lists of document filings.
I have listed the best of links for anyone interested in researching Arian Silver Corporation further. If you have a blog or site with Arian Silver Corporation specific pages, please send me the link for review and I will include your work in the link section as appropriate.
Got comments? Questions? Please Talk Back.
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