trading stock or one for the future?, page-18

JID

Without wishing to be a party pooper (after all I do own some EVG shares) today's fall took place despite the rising POG which would make the LL project more attractive.

I expect investors and maybe some "speculators" will come home from work tonight and think hard about whether they want to remain in this company and consider selling out. Many of them have made some EVG profits and will move on to other goldies that are moving or believe will soon move. This will drive the share price down in the near term.

As regards the market capitalisation of EVG and the return on the LL project, this is one where we should not use a PE ratio to value EVG. We should use a discounted net cash flow model to get to total post-tax net profits and divide by the number of shares (preferably on a fully diluted basis, which means around 580m? shares as a result of the new options). We need to recognise that there is not likely to be any dividends for some years with the profits going towards new projects.

For me (a newcomer to EVG) this company has attractions if it can successfully operate a number of LL-type projects so that it ramps up production on an ongoing basis to over 150,000 ounces per annum (in its own right). I think this may be its plan, but tell me if I am wrong. Such a plan is not easy to accomplish and takes time. There will be stuffups along the way and possible further dilution. Yes it is a long slog. However, if it does accomplish this plan and has adequate long term reserves to sustain itself then we could value EVG using a PE ratio applied to its EPS.

loki (just a mug punter who knows very little so disregard my post)