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2.69 was the all time INTRADAY high, but the close that day was 2.58.


Today itÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s made a new intraday record high and looks set to close at a record high.


Last time it hit 2.69 gold was $1300; now its $1900.


ERA has a NPV of $3.44 at $1500 gold but $6.43 at $1900 gold.


My short term target is $3.20.


My 3 year target is $8 on my numbers (not ERAÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s) and thatÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s assuming a flat gold price of $1800 and assuming they meet their targeted output.


Remember their $6.43 NPV is what its worth now based on $1900 gold after discounting for time, not what its worth in three years.



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SOCIETE GENERALE on AUG 22 raised its 2012 forecasts to average $2,275 per ounce, and expects around $2,500 an ounce in the fourth quarter of 2012.


At $2000 gold (not $2500), ERA has a NPV of $7.18 on SLR ($3.44 AT $1500).

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My numbers on SLR.

I used 300,000oz per year in 3 years.

I allowed $20mill per year exploration and $10mill admin and $600 cash costs.

I still get a cashflow of $226 million after royalties and tax using $1900 gold. My guess is gold will be well above $2000 in three years and could be over $2500 quite easily.

At $1900 gold you would need a share price of $9 to bring the cashflow multiple to around 8 using my assumptions.

Even on this years forecast production, you need a price of $4.40 to arrive at a cashflow multiple of 10 if you use 1900 gold. That cashflow multiple is easily justified given the organic growth options and resources.

I have a short term chart based target of $3.20.

My idea of a reasonable short term fundamental target would be $3.50 for a cashflow multiple of 10 for this year based on an average gold price of $1700 and 130,000oz and $600 cash costs.

With Hamoa grades this should prove conservative on cash costs and ounces produced. The $1700 gold price may also prove conservative.

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  • 2 weeks later...

It really surprises me how cheap SLR is.


I keep comparing it to other gold stocks.

I compared it to Integra yesterday.


I haven't looked into Integra enough to comment on its valuation but I can do a rough comparison to SLR.


Market cap IGR around 450 mill, SLR 540 mill.


Both have an impressive growth in resources over recent years, and both in Australia.


Integra has cash cost forecasts on reserves of $685/oz over 6 year reserve life with gold production currently 80,000 oz/yr and targeting 120,000-130,000 oz per year over 10 years.


Most of the growth targeted coming from u/g which will account for around 30% of production.


They are looking at a potential second operation at Aldiss which has a resource of 500,000 oz but they say a moderate additional discovery is required to justify a stand alone project there.


I guess the potential is another 50-70,000 oz per year if exploration is successful, but it is not considered economic at this stage.


Grades there are quite low, so I wouldn't allow too much for this project yet.


U/g ave grades are significantly lower than SLR's Mt Monger, but similar to SLR's Murchison u/g grades.


Murchison u/g ore is much wider than Mt Monger so SLR expects to use bulk u/g mining there compared to the current narrow vein mining used at Monger.


SLR has proven it's competence with u/g mining.


SLR expects 130,000 oz this year from Mt Monger, 210,000 oz for FY 2013 (including initial prod from Murchison), and 300,000 oz/yr from 2014.


Cash costs are only forecast for Mt Monger at this stage, but that makes up two thirds of planned future production.


Cash costs $560 for FY 2012, falling to $520 from FY 2014 (excludes royalties).


Murchison not expected to be much higher cash costs as is a combination of open pit and the u/g is lower grade than Mt Monger but is expected to be bulk mined.


Biggest risk is the inherent risk with u/g mining. Other risks; that they don't have the same success with Murchison using bulk mining as they have had with narrow vein mining at Mt Monger, but I don't see any reason to anticipate that.


I have SLR on PE of just 6.5 for this year using spot gold ($1850) or 8.7 at $1600 gold.


Looking at gold charts $1600 looks like good support, so a higher average price seems likely.


None of the very likely very strong growth is factored in, as these multiples are about right for a company with a 10 year mine life with no growth and no debt.


Even without Murchison, Mt Monger has already undergone expansions (near complete) to allow for 200,000 oz per year by FY 2014 from Mt Monger.


I allow 200,000 oz for 2013 at $600/oz which gives a PE of 3.7 at $1850 gold. Crazy!


At the companies target of 300,000 oz by 2014 using $650/oz overall cash cost and $1900 gold, I get a PE of 2.4.


This stock looks cheap enough just on this years earnings. If they achieve target by 2014, the SP could rise by a factor of at least 3-4 for a PE of 7.2-9.6 using $1900 gold.


Iexpect the gold price has the potential to be much higher than that in 3 years so this company has the potential double whammy effect from growth and higher gold prices.


A $2500 gold price for 2014 gives a PE of 1.6. A potential share price rise of a factor of 5 (for a PE of 8) over 3 years on a non speculative, not very high risk company with no debt, proven management excellent resource base with excellent further growth potential and all Australian assets.


My PE forecasts allow for planned 18mill/yr exploration budget, 5 mill/yr admin (may need higher after Murchison starts up), 5 mill/per year recurring capex.


Do your own research but my research shows this as a very undervalued company. The strong uptrend should continue well beyond the current level.


Again I point out u/g mining is more risky than open pit. If it was all open pit I would really be loading up, but then it probably wouldn't be this cheap either.


The chart appears on the verge of a significant breakout. It's already sitting on record closing prices. Last nights breakout of the HUI should support.

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  • 3 weeks later...



I just outdid you ! Got mine at 0.59 during the GFC.


I think most gold producers are at, or close to record levels now. I also have Perseus and Troy which are around record highs, but my Integra are nowhere near the previous high of the low 0.70s - I wonder why ? Maybe they were overvalued before.



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  • 2 weeks later...

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