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Last update July 29, 2010: enumerated the factors currently being considered to set the discount factor in valuation blogs.
The Gold Explorer-Producer Valuation chart has been updated to reflect stock prices and metal prices at the market close on 2010-Sep-02. This page is typically updated 1 to 2 hours after the close of trading in North American markets.
All companies in the chart are represented by their TSX or TSXV 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 Gold Equivalent. Gold producers are typically denoted by a * following their trading symbol.
All things being equal, gold producers are expected to appear on the Gold Producer Valuation Line and gold explorers are expected to appear on the left hand side of the Explorer-Producer Gap. The Explorer-Producer Gap is the gap indicated by the heavy green arrows (i.e. the area between the two dashed lines) in the Gold Explorer-Producer Valuation charts. The junior gold explorers are expected to to appear to the left of equivalent gold producers with a large enough gap to fully reflect the dollar values associated with:
Capital Expenditures required to move an ore deposit from a simple exploration project to fully developed operating gold mine.
Discount Factor is used to account for:
Expected reduction in metal counts as resources move from Inferred (or Measured + Indicated) to Proven + Probable reserves. This includes lose of resources that fall outside of the mining plan as well as the potential reduction of resource grades and tonnage estimates as the additional data becomes available in the process of moving resources to reserves. This factor is also used to account for the anticpated metal losses due to recovery factors of less than 100%. In short, the Inferred resources and Measured + Indicated are adjusted to account for the probable resource losses in the transition to reserves.
Royalty obligations.
Other like factors that may affected the metal recovery from a given deposit.
Risk Premium associated mine development execution.
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The Capital Expendicture estimates, discount factor and risk premium are inputs to the Fair Market Value Calcuation formulas.
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.
Gold Key:
AEM
| AND
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| G
| GAM
| GGC
| K
| NG
| RIO
| RPM
| TVI
| XCL
| YRI
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