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By Dennis Boyko
Created on: March 22, 2010
Current version 0.20: 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 Trelawney Mining and Exploration Inc., based on the current NI 43-101 resource disclosures and using extremely optimistic capital cost estimates, is C$2.54. The actual closing stock price was C$3.44.
Clearly Trelawney Mining and Exploration Inc. is trading on future expectations and not the currently known NI 43-101 resources.
At the close of trading on and based on current NI 43-101 reports, the current and projected Market Capitalization per ounce of Gold Equivalent for Trelawney Mining and Exploration Inc., were:
current market valuation: US$122.57 per ounce of Au Eq.
projected fair market valuation as a gold producer: US$117.95 per ounce of Au Eq.
Trelawney Mining and Exploration Inc. in situ metal value is 100% from gold. Therefore Trelawney Mining and Exploration Inc. is valued on the Gold Producer Valuation Line.
The average ore value per tonne was US$61.42.
Projected fair market stock price for Trelawney Mining and Exploration Inc. is derived using the projected fair market valuation of US$117.95 per ounce of Au Eq (as derived above) and the following assumptions:
Capital Expenditure for mine development: US$20M -- a very optimistic number is assumed.
Risk Premium: 20% applied to the capital expenditure,
Discount Factor: 20% -- set to account for the gap before the deposit can be moved into production. This discount accounts for the resource loss from the mining plan, ore processing losses, and like factors as well as the time discount between now and the future start of production. Given that the resource is 100% Inferred, this is an optimistic discount factor.
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 valuation does not assign a value to the other properties held by Trelawney Mining and Exploration Inc. since these properties do not have NI 43-101 compliant resource disclosures.
Given the current market valuation, the market is clearly expecting significant future resource count increases. Part of this expectation is driven by the March 2010 drill results from the Chester property. Quoting from Trelawney Intersects 107.11 Metres of 8.20 g/t Gold Including 313.55 g/t Gold Over 2.56 Metres:
Hole E09-03 - 68.07 metres of 2.04 g/t Gold
Hole E10-04 - 107.11 metres of 8.20 g/t Gold (uncut), including 313.55 g/t Gold over 2.56 metres
Hole E10-05 - 57.30 meters of 2.49 g/t Gold and 178.80m of 1.45 g/t Gold
Other projects held by the company include:
The Mishi Gold and Massey Mine projects are not valued as part of this valuation blog.
Other events worth considering include:
TRELAWNEY "BOUGHT DEAL" PRIVATE PLACEMENT OVER‐SUBSCRIBED. March 12, 2010 release. The placement was completed at C$1.05 per share and did not involve warrants.
Trelawney Adopts Shareholder Rights Plan. March 9, 2010 news release.
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, Trelawney Mining and Exploration Inc. has an average ore value per tonne (y axis) of US$61.42 and a Market Capitalization per ounce of Gold Equivalent of US$122.57.
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 Trekawney Mining and Exploration Metal 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.
Trelawney Mining and Exploration web site.
NI 43-101 Metal Valuation Reports: Trelawney Mining and Exploration
Canadian Insider Reports:Trelawney
StockCharts.com: Trelawney and
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.
Google News Searches: Trelawney Mining
I have listed the best of links for anyone interested in researching Trelawney Mining and Exploration Inc. further. If you have a blog or site withTrelawney Mining and Exploration Inc. 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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