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By Dennis Boyko
Created on: October 4, 2010
Current version 1.0: October 6, 2010 -- initial release.
Metrics have been updated with closing prices available on 2012-May-17.
Projected fair market stock price for Plato Gold Corp., based on the current NI 43-101 resource disclosures for the Nordeau West deposit only, is C$0.07. The Nordeau deposit is the sole basis for this valuation. No value was assumed for the other company properties. The actual closing stock price was C$0.015.
At the close of trading on 2012-May-17 and based on NI 43-101 reports available in September 2010, the current and projected Market Capitalization per ounce of Gold Equivalent for Plato Gold Corp., were:
current market valuation: US$13.36 per ounce of Au Eq.
projected fair market valuation as a gold producer: US$191.97 per ounce of Au Eq.
Plato Gold Corp. in situ metal value is 100% from gold. Therefore Plato Gold Corp. should be valued on the Gold Producer Valuation Line or even at a small premium.
The average ore value per tonne was US$207.67.
Projected fair market stock price for Plato Gold Corp. is derived using the projected fair market valuation at start of production of US$191.97 per ounce of Au Eq (as derived above) and the following assumptions:
Capital Expenditure for mine development: US$20M -- a very rough estimate for development assuming maximum resuse of the regions extensive milling infrastructure and well equipped mining subcontractors in the region. This estimate will be updated once a scoping study or pre-feasibility study is available.
Risk Premium: 10% applied to the capital expenditure,
Discount Factor: 10% -- the discount factor has been set relatively low to reflect the fact that significant historical resource counts exist for this deposit and given the promising 2010 drill results from the Phase 2 Drilling Progrm: Norbeau East property can be reasonable expected to upgrade to a resource with future development.
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 current Plato Gold Corp. properties, although the historic reserve estimates on Noudeau East property has been noted in setting a discount factor in valuing the Nordeau project. This is clearly a very conservative approach since the company has a significant early stage exploration project in the Timmins Ontario area with past producing and underdevelopment mines nearby. The Lolita project in Santa Cruz, Argentina consists of 29,000 hectares in a well established mining area with excellent road access. Again, this valuation does not assign a value to Lolita.
From: Anthony Cohen (Plato Gold)
Sent: Monday, October 04, 2010 4:22 PM
Thank you for your good work.
I have no quarrel with what you have prepared and it jives very closely with what I believe Plato Gold Corp. is worth.
There is NO VALUE for either the Ontario or Argentina properties as you have noted. As well, we have built up a good land position in Quebec.
Therefore I believe the work shows that Plato Gold Corp. at $0.045 per share is significantly undervalued.
...
Best regards,
Anthony J. Cohen
President & CEO
Plato Gold Corp.
Got comments? Questions? Please Talk Back.
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For the chart above, Plato Gold Corp. has an average ore value per tonne (y axis) of US$207.67 and a Market Capitalization per ounce of Gold Equivalent of US$13.36.
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 Plato Gold Metal Valuation Report.
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.
Plato Gold web site.
Plato Gold 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 Plato Gold Corp. further. If you have a blog or site withPlato Gold Corp. specific pages, please send me the link for review and I will include your work in the link section as appropriate.