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By Dennis Boyko
Created on: April 17, 2010
Current version 0.31: April 19, 2010 -- minor edits.
Metrics have been updated with closing prices available on 2012-Feb-07.
Projected fair market stock price for Exeter Resource Corp., based on the current NI 43-101 resource disclosures for the Caspiche project, is C$4.66. The actual closing stock price was C$3.67.
At the close of trading on and based on NI 43-101 reports available in April 2010, the current and projected Market Capitalization per ounce of Gold Equivalent for Exeter Resource Corp., were:
current market valuation: US$8.63 per ounce of Au Eq.
projected fair market valuation as a gold producer: US$55.52 per ounce of Au Eq.
Exeter Resource Corp. in situ metal value is 62.4% from gold and 2.9% from silver. Exeter Resource Corp. is being conservatively valued at 50% of the Gold Producer Valuation Line. The copper which make up the remainder of the ore value per tonne, is assumed to be credits towards the per ounce production costs of the gold.
The average ore value per tonne was US$41.51.
Projected fair market stock price for Exeter Resource Corp. is derived using the projected fair market valuation at start of production of US$55.52 per ounce of Au Eq (as derived above) and the following assumptions:
Capital Expenditure for mine development: US$1500M -- a very rough estimate of the CapEx required to bring the Caspiche deposit into production. This estimate will be updated once a scoping study or a pre-feasibility study is available. Higher CapEx requirements would result in a lower projected fair market stock price while lower CapEx numbers would further increase the projected fair market stock price.
Risk Premium: 15% applied to the capital expenditure,
Discount Factor: 25% -- set to account for the possible lose of in situ metal from mine design, metalurgical recoveries and like factors. Minimal discounting is assumed for the San Luis deposit since the company has a 20% fully carried if Silver Standards exercise their option.
The discounting of the future gold metal prices after the start of production is already fully accounted for in the Gold Producer Valuation Line which is derived from current day market prices and company fundamentals from a number of established gold producers.
The supporting model and the calculations used to produce the projected fair market stock price are detailed in Fair Market Price Calculations.
This blog does not assign any value to potential for organic growth on the company's Caspiche property and does not assign any value to the other deposits the company holds. This is clearly a very conservative approach since the Caspiche property resource count has expanded significantly in the latest NI 43-101 report.
The Caspiche is clearly in a well established gold mining region of Chile as the following image from the company's April 2010 presentation shows (note the Kinross and Kinross/Barrick mines to the left and right of the Caspiche deposit):
Gold Key:
AEM
| AND
| AUQ
| G
| K
| RIO
| TVI
| YRI
Place mouse over each key symbol to read graph values.
If the key symbol is shown in bold, click to view the GoldMinerPulse valuation blog
for that company.
For the chart above, Exeter Resource Corp. has an average ore value per tonne (y axis) of US$41.51 and a Market Capitalization per ounce of Gold Equivalent of US$8.63.
The Gold Explorer-Producer Valuation Hypothesis is based on the data driven observation that a company's market capitalization per ounce of gold equivalent tends to rise based on the current valuation of the metals contained in an average tonne of ore. For developer/explorers, it is also assumed that the true Explorer-Producer Gap should be large enough (but no larger) to cover the expected future capital expenditures, risk premiums and time discounts.
The original motivation for the Gold Explorer-Producer Valuation Chart was developed in Junior Gold Explorer Valuation Observations. Application steps and the generic factors that need to be considered in applying this valuation method are further described in Gold Explorer-Producer Valuation Exceptions.
This blog is based on the stock fundamentals and current metal prices as documented in the Exeter Resource Valuation Report.
The Gold 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.
Last update was for the market close on 2012-Feb-07.
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.
Exeter Resource Corp. web site.
Exeter Resource 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
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 Exeter Resource Corp. further. If you have a blog or site withExeter Resource Corp. 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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