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By Dennis Boyko
Created on: February 24, 2010
Current version: 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 is C$0.00. The actual closing stock price was C$.
Based on the close of trading on 2012-Feb-07, the current and projected Market Capitalization per ounce of Silver Equivalent for were:
current market valuation: US$0.00 per ounce of Ag Eq.
projected valuation as junior silver producer: US$1.89 per ounce of Ag Eq.
Projected fair market stock price for is derived using the estimated valuation of US$1.89 per ounce of Ag Eq (as derived above) and the following assumptions:
Capital Expenditure to put all deposits into production: US$350M -- a very rough estimate of the capital costs required to bring the Silvertip and the GC Claim deposits into production. The CapEx values is a SWAG and needs to be refined as feasibility studies become available for the GC Claim and Silvertip.
The Silvertips deposit, although in a remote part of Canada as can be seen from the
Google map view, is relatively close to a major highway and an access road
exists (chart is from a NI 43-101 report prepared for Imperal Metals Corporation, October 2002).
Risk Premium: 25% -- applied to the estimated capital expenditure,
Discount Factor: 10% -- discount between present and start of production for the GC Claim and Silvertip deposits. The discount value reflects the fact that the Ying deposit is in production and the GC Claim is in an advanced stage of development.
The discounting of the future silver metal prices after the start of production is already fully accounted for in the Junior Silver Producer Valuation Line which is derived from current day market prices and company fundamentals.
The supporting model and the calculations used to produce the projected fair market stock price are detailed in Fair Market Price Calculations.
The is a large uncertainty is associated with the capital expenditures that would be required to complete development on the GC Claim and Silvertips deposits. If the required capital expenditures are less than the values used in this blog, the projected fair market stock price would increase.
Silver Key:
AXR
| AUQ
| EDR
| IPT
| OK
| PAA
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Reasonable rates and excellent value.
For the chart above, has an average ore value per tonne (y axis) of US$ and a Market Capitalization per ounce of Silver Equivalent of US$0.00.
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 blog is based on the stock fundamentals and current metal prices as documented in the Silvercorp Metals 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.
The Junior Silver Producer Valuation Line and the Major Gold Producer Valaution Line are both shown to be linear with respect to increasing ore value. However, by looking at an extreme case of an average ore value approaching pure silver, the valuation lines will be limited by the market's expectation for the future price of silver. In other words, the valuation lines will approach but fall short of the a vertial line set at a Market Capitalization per ounce of Silver Equivalent equal to the expected future price of silver. That is, metal in the ground can never be worth more the expected future price of the metal.
Whether or not is still within the approximately linear range of the valuation lines is to be determined. That is, GoldMinerPulse needs to add more silver producers with high average ore value per tonne to confirm at what point the valuation curves start to break from a linear line (i.e. transition from a constant slope to a line where slope increases with market cap per ounce of equivalent).
I have listed the best of links for anyone interested in researching further. If you have a blog or site with specific pages, please send me the link for review and I will include your work in the link section as appropriate.
Silvercorp Metals web site.
Silvercorp Metals 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.
Discussion forums: StockHouse and Yahoo
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.
Got comments? Questions? Please Talk Back.
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