Hello fellow holders,
While our forums are still quiet i was inspired by a past post from @jaked Post No. #18141945 in which he discussed potential value given Exterra undertaking production with management from MRG.
Out of interest I decided to take the PFS for Second Fortune and use those figures to take a best, worst and current projection of value based on fluctuations in the AUD POG and total costs outlined in 2014.
http://www.exterraresources.com.au/projects/linden_project/
The best and worst case scenarios are purely IMO and speculation based on where AUD and POG will lie at the end of the year or what is hopefully into the "Near Term Production" management has alluded to in previous announcements. Obviously these are estimates, if i could accurately predict commodity price movements i wouldn't be on HC.
Now the best case scenario encompasses a fall in the AUD, which was largely derived from a potential RBA rate cut and sustained downward volatility for our dollar as other major central banks act on their own interest rates. The POG estimate of $1450 USD is assuming further uncertainty continues in world markets, for example, a potential bailout of Italian Banks from the EU, a slowdown in US and EU economic growth (possibly a recession), continuing positive sentiment and uptrend etc. The best and worst case costs are taken as $100 equidistant from the PFS total cost of $1016 largely stemming from cheaper oil than the 2014 highs of $100+ a barrel and other speculation. A flat management fee to MRG of $200 per ounce was used purely from similar numbers to jaked's post as again this was just an exercise to fill the time and could not be bothered comparing the fees different mine contractors received per ounce.
Subsequently the worst case scenarios take into account largely the opposite of many of these events and as stated earlier is merely a set of numbers for the exercise. DYOR!!
Now below is the table used to work out the given values and Net Profit per Share.
I then went through a number of ASX Producers on the Market and looked up their P/E Ratios as well as the Sector Value and an Average of all the values I collected. I know that these are not all of the producers on the market and almost all of these have much larger production levels and longer mine lives but the idea still holds somewhat i think.
As you can see there is a large level of variance between these and again it comes to down to the differing perception and facts behind each different share but gives a good view of what we'd all love EXC to get to one day.
The final photo is using the Net Profit per share from above and multiplying it by the different P/E Ratios to get a prospective share price.
So as you can see with a more positive AUD POG environment it is no wonder that management elected to go it alone and why many of us holders are confident of some level or upside with what is a very tightly held registry.
Some assumptions and problems with the values include not including Capital Expenditure which will need to be undertaken to set up the mine and begin production but again this was purely something that tweaked my interest for an hour an I thought i might share, if not at least for some entertainment so please don't argue at length with the different scenarios.
I hope this is of some interest to other holders and potential new holders and inspires you to do some further research into EXC. Good Luck to all.
DYOR
Merrico
