stervc.....Thank you for the reply. There are a number of errors that you have made in regards to the valuation of this niobium property and your assumptions of market capitalization and earnings per share. Let's start with what is agreed upon.
1) The property has an "indicated" niobium resource of 20,000,000 tons of .47% niobium. The wording of the PR is explicit - using "indicated" and "potential". The government also does not confirm anything. The Ontario Geological Survey Study 34 merely reports what has been done on the properties by the private companies who did past drilling and aeromagnetic surveys and does not give any type of "confirmation" or "opinion" - just reports the findings. These findings may be flawed - may be high or low on the estimate as the company cannot presently draw a conclusion on reserves that would be NI 43-101 compliant. Until the company releases reserves that are "proven" and "measured", all we got is potential and it is very very difficult to use a figure. I used the $4.7 billion figure based upon the "potential" for 188,000,000 lbs of niobium, but that may be high or low depending upon future drilling that will need to be done to prove up what we suspect to be there. Therefore, I agree with the $4.7 billion reserve assumption.
2)You say:
"The current Market Cap for SRSR is:
.011 x 725,866,058 Fully Diluted OS = $7,984,527
That Niobium property acquired by SRSR now gives us an ”officially confirmed potential” Market Cap of $4.7 Billion."
I agree with your calculation of present SRSR market capitalization (price of common stock X shares issued and outstanding), but to infuse the "potential" and "assumed" value of our present niobium deposit and call it a market cap is expressly incorrect. I would suggest looking at a few mining stocks with "proven" reserves who are in SRSR's status - exploration and not mining as yet. You will find that even with qualified 43-101 reserves, they are valued at from 2%- 20% of proven reserves. The closer a company gets to actually mining a deposit, the greater the resources will be valued (higher SP). This is because of the great risks and unknown costs involved in the mining process. The market would never ever price a stock to reflect 100% of its proven reserve value. I'll give you a good example:
Nova Gold, an exploration junior with total reserves under NI 43-101:
Proven and probable reserves (gold, silver, and copper - converted to gold equivalent ounces) = 55,782,907 total gold equivalent ounces X $880/oz. = total reserve market value of $49,088,958,000.
Share price: $11 Fully diluted common stock: 120,320,000
Market cap = $11 X 120,320,000 = $1,323,520,000
Market cap as a percentage of mineral resource value:
$1,323,520,000 divided by $49,323,520,000 = 2.7%
Sterling, do you see why I used 3% in my example. It isn't "conservative", it is reality. I just base assumptions with what is going on in the real world.
3) You say:
"Let me make sure I understand the level of your conservatism of which you are referring. You are saying that out of the $4.7 Billion in valuation, we could see a near-term profit valuation of SRSR equating to a high of 3% of the $4.7 Billion estimated reserves derived as indicated below:
188,000,000 pounds x $25 x .03 = $141,000,000
Then you say that we could then derive an Earnings Per Share (EPS) as indicated below:
$141,000,000 ÷ 725,866,058 Fully Diluted OS = 0.194 EPS"
No, I did not say anything about "earnings per share" as in my example and in yours. There is NONE! We are not making a dime yet - no mining - no selling of niobium - therefore no revenue and no EPS. I took 3% of the unconfirmed resource (188,000,000 lbs. at $25/lb) and divided that figure by the fully diluted stock to arrive at an estimate of share price.
4)You say:
"Now, the part that you left off was that the EPS must be multiplied by a PE Ratio to capture the current growth rate for its Sector and Industry that it trades in comparison to like stocks. To keep people from thinking that you are pumping (LOL), I will use 12 as a conservative PE Ratio to derive below:
.194 x 12 Conservative PE Ratio = $2.33 Current Potential Share Price"
Sterling, again you are incorrect in assuming that we have earnings and that we can then take a figure (12) as a multiplier P/E ratio to obtain a a share price. Since we don't have earnings, there will be no P/E ratio and no multiplier applied. You are mixing apples and oranges. Please refer back to my Nova Gold example as they are in the same boat as us - only with a heck of a bigger market cap.
My hope is for this board to be presenting an accurate and honest appraisal of what is going on here. We have no NI 43-101 reserves, but we do have a strong indication of a world class niobium deposit that could be valued at $5 billion big ones - maybe more - maybe less. Based upon what other junior explorers (Nova Gold) in our exploration category are selling for in the market, our stock at 1.1 cents is really underevalued. Based upon taking 3% (Nova Gold is valued at 2.7% of total reserves) of SRSR's $4.7 billion niobium deposit and a fully diluted stock count of 725,000,000 shares, the stock would be trading at 15.4 cents. Hope this clears things up a bit....GLTA ....Jim
AI
