Southridge Enterprises Inc (SRGE)

[bigmoneytrader]

$$$$ WEALTH IS COMING for SRGE LONGS $$$$

SRGE Cinco Minas Fundamental Valuation(s)…

This is an ”edited” version of an earlier valuation post that was created. An edited version is required to give us as investors an idea of where SRGE should exist to trade given the new amount for the SRGE Outstanding Shares (OS) recently confirmed within the share structure indicated below:
investorshub.advfn.com/boards/read_msg...d=79425075

Outstanding Shares (OS) = 545,874,868 shares

Float = 215,957,230 shares
Restricted = 329,917,638 shares

I will also make sure that we capture and take into account… a worst case scenario OS of 1,000,000,000 shares to max out the most the SRGE OS could be… a 10 year life span of the mine scenario… a 20 year life span of the mine scenario… and many other thoughts to create a variety of views to show that even from a worst case scenario perspective here with SRGE… we are golden.

Before anyone read any further, I think it is important to read the links below to understand that SRGE owns the Cinco Minas and not Bandera Gold Ltd:
http://investorshub.advfn.com/boards/read_msg...d=79565513
http://investorshub.advfn.com/boards/read_msg...d=79565854
http://www.free-press-release.com/news-minera...33273.html

Also, important to understand is that ”potential” is the #1 reason why we all buy a stock. We buy a stock at a certain price in hopes of it will be at a higher price sometime in the future; hopefully sooner rather than later. I’m explaining this to understand that the ”potential” SRGE share price valuations below should not be considered the gospel. It must be known that the price valuations could be somewhat achieved quickly or they could take some time. All of this will be up to the company and not what I have derived and explained within the rest of this post. The valuations below should be viewed as a forecast of what could very well happen, especially now that SRGE is in production generating millions of dollars.



The news recently released on 5 Sep 2012 about SRGE’s production below is very big. The news states that SRGE processed over 9,000 tons of ore and recorded revenues of $3.14 Million in just its 4th Quarter Fiscal Year 2012 ending Aug 2012. The company also has a 2 year supply of ore production currently on surface at the Cinco Minas property location. This PR can be reviewed below:
http://ih.advfn.com/p.php?pid=nmona&article=54054364

Then SRGE released news of expansion of its mill capacity to 500 tons per day (tpd):
http://ih.advfn.com/p.php?pid=nmona&article=54109315

From the company’s recent PRs, 80% of the known vein system at Cinco Minas gold and silver property has yet to be tested which means that the mentioned/PR-ed world-class ”confirmed” gold and silver resource amounts of 235,000 oz. of gold and 23.3 million oz. of silver represents only 20% of the world-class confirmed gold and silver resource at Cinco Minas. Let’s derive just how much 20% of this confirmed amount equates to for SRGE after learning of the OS now being recently verified to be 545,874,868 shares to determine a potential share price of where SRGE could fundamentally trade…

Important to note below, I and others have personally confirmed that the company is willing to provide a tour for any investor that wants to come down to Mexico to see that their Cinco Minas gold and silver operations really is real and is in production:
http://investorshub.advfn.com/boards/read_msg...d=79599627
http://investorshub.advfn.com/boards/read_msg...d=79537506

Let’s now derive these varieties of fundamental valuations to consider.



Gold and Silver Amounts from 20% of Confirmed Resources from the PR:
Gold = 235,000 oz
Silver = 23,300,000 oz

Gold = $1,700.00+ per ounce as of 9/14/2012 close
http://www.kitco.com/charts/livegold.html
Gold Revenues from 20% of Confirmed Resources = $1,700.00 oz x 235,000 oz of gold
Gold Revenues from 20% of Confirmed Resources = $399,500,000

Silver = $34.00+ per ounce as of 9/14/2012 close
http://www.kitco.com/charts/livesilver.html
Silver Revenues from 20% of Confirmed Resources = $34.00 oz x 23,300,000 oz of silver
Silver Revenues from 20% of Confirmed Resources = $792,200,000



Total “Combined” Gold and Silver Revenues from 20% of Confirmed Resources of Cinco Minas:

Total Gold & Silver Revenues = $399,500,000 Gold Revenues + $792,200,000 Silver Revenues
Total Gold & Silver Revenues = $1,191,700,000

Investors can go to the National Instrument (NI) 43-101 and other mining reports below to see that the ”$1,191,700,000 for total gold and silver valuation” from the Cinco Minas is consistent with the SRGE PRs when it states that… ”Today's market value of the confirmed resource at Cinco Minas is well over $1 Billion USD…”:
http://www.southridgeminerals.com/SouthridgeP...43-101.pdf
http://investorshub.advfn.com/boards/read_msg...d=79308287

This amount was originally derived from John Nebocat (P.Eng.), the professional and qualified Geologist who represents someone who is very qualified. Anyone choosing to question his qualifications can read the Form 6-K filed with the SEC below:
http://msnmoney.brand.edgar-online.com/EFX_dl...8s8Yxxq2m9



Below are the fundamental formulas that are recognized throughout the market to assess a fundamental valuation to eventually derive an ”Expected Price Per Share” for SRGE:

Revenues – Net Expenses = Net Income
Or…
Revenues x Net Profit Margin = Net Income

Then…

Net Income ÷ Outstanding Shares (OS) = Earnings Per Share (EPS)
EPS x Price to Earnings (P/E) Ratio = Expected Price Per Share

We must now determine the variables above to solve for the formula to derive an ”Expected Price Per Share” for SRGE considering this newly learned OS.



The Revenues for the gold and silver from the Cinco Minas is expected to be $1,191,700,000 as previously derived.

Although we don’t know the Net Expenses, we can use the information below for the Gold Industry standard for ”Net Profit Margin” since it is the difference until more is released from the company to confirm something different. The Yahoo link below reflects a ”Net Profit Margin” for the Gold Industry of 24.00% as of 14 Sep 2012:
http://biz.yahoo.com/p/134conameu.html

If the Net Profit Margin is 24% then the Net Expense Margin is 76%. Now we can derive Net Income as indicated below:

Net Income = $1,191,700,000 x .24
Net Income = $286,008,000

Now we must divide the Net Income amount by the SRGE OS to derive an EPS. The last unofficial update within the SRGE forum was that some shares have been recently retired back to the company’s Treasury resulting in an OS amount of 545,874,868 shares. The Authorized Shares (AS) for SRGE is 1,000,000,000 shares. This is the max amount that the OS could be increased to be. So, I will also explain how to determine a valuation consideration for a worst case scenario OS being maxed out to be the max amount of 1,000,000,000 shares. For now, we’ll keep moving on with the scenario from the data provided to the forum.

Also, important to note is that the Float is reported to be 215,957,230 shares which is also smaller from its previous amount indicated within the OTC Markets database of 242,957,230 shares. The total volume from 4 Sep to 16 Sep 2012 has been over 938,000,000+ shares. Because of the price going from .0004 to as high as .0095 per share and has stabilized here in the in the .003s and .004s, I am leaning towards the majority of the shares traded being “buys” versus “sells” with SRGE. I am expecting for SRGE to begin trading thinner and thinner as time continues. The Float is either gone or nearly gone in my opinion to where the inventory of shares is very minimal if the share structure actually is what has been stated.

Now let’s move forward to consider below for deriving an EPS…
(I will later account for and factor in a mine life expectancy of 10 and 20 years.)

EPS = Net Income ÷ OS
EPS = $286,008,000 ÷ 545,874,868 OS
EPS = .523 per share

Now to determine a fundamental valuation of where SRGE should be trading if this amount for Net Income is captured, we must multiply the EPS by the Price to Earnings (P/E) Ratio for the industry in which it would trade which in this case would be the Gold Industry. As indicated below, 21.20 is the P/E Ratio for the Gold Industry:
http://biz.yahoo.com/p/134conameu.html

To understand more about the logic centered on the P/E Ratio, please read the link below:
http://investorshub.advfn.com/boards/read_msg...d=57154170

Now let’s derive a share price of where SRGE could fundamentally trade now that we have our EPS:

Expected Price Per Share = EPS x P/E Ratio
Expected Price Per Share = .523 x 21.20
Expected Price Per Share = $11.08 per share

Important to note; the above $11.08 per share amount is the per share valuation if everything were to happen over a 1 year time frame of which a 1 year time frame is not realistic to consider. What is realistic is to consider is the amount to be derived over a 10 or 20 year life expectancy of the mine.

Also, important to note; this $11.08 per share valuation is derived from ”only” the gold and silver amounts from 20% of confirmed resources. Considering the Geologist, the NI 43-101, and other reports indicated above, that amount is very reliable, but just needs to have factored in a 10 or 20 year life expectancy of the mine. This 20% is the amount that I believe major mining companies will see and consider that will be wanting to buyout SRGE to be able to capture the 20% plus the remaining 80% of the Cinco Minas. They will see more of a future concept versus a “right now” concept. Let’s capture both the 20% and the 80% and a 10 or 20 year life expectancy of the mine below to give us an even yet better understanding of some more valuations to consider:

To derive the price valuation for the life expectancy of 10 years, just take the valuation of $11.08 per share and divide by 10 years as indicated below…

$11.08 ÷ 10 years = $1.10 per share per year for 10 years

Now, keep in mind that if the SRGE per share fundamental valuation of $1.10 represents 20% of the Cinco Minas, then the remaining 80% equates to…

$1.10 x 4 = $4.40 per share per year for 10 years

So, with considering a life expectancy of the mine to be 10 years…

20% SRGE Valuation of the Cinco Minas = $1.10 per share
80% SRGE Valuation of the Cinco Minas = $4.40 per share

100% SRGE Valuation of the Cinco Minas = $5.50 per share

This means that $5.50 per share per year is the total 100% per share fundamental valuation for a 100% consideration of the Cinco Minas considering a 10 year life expectancy of the mine.

Now, to consider a worst case scenario if the OS was to be 1 billion shares, just divide any of the above valuations by 2 to cut in half the amounts to have a close approximate value since the OS suspected is approximately half of the maxed out amount for the OS. This can be used as a quick method to derive such because the OS is the key fundamental denominator that was used to asses and derive all of the valuations.



For a 20 year life expectancy consideration of the mine, divided by 20 as indicated below…

$11.08 ÷ 20 years = .55 per share per year for 20 years

Again, keep in mind that if the SRGE per share fundamental valuation of .55 represents 20% of the Cinco Minas, then the remaining 80% equates to…

.55 x 4 = $2.20 per share per year for 20 years

So, with considering a life expectancy of the mine to be 20 years…

20% SRGE Valuation of the Cinco Minas = .55 per share
80% SRGE Valuation of the Cinco Minas = $2.20 per share

100% SRGE Valuation of the Cinco Minas = $2.75 per share

This means that $2.75 per share per year is the total 100% per share fundamental valuation for a 100% consideration of the Cinco Minas considering a 20 year life expectancy of the mine.

Again, to consider a worst case scenario if the OS was to be 1 billion shares, just divide any of the above valuations by 2 to cut in half the amounts to have a close approximate value since the OS suspected is approximately half of the maxed out amount for the OS. This can be used as a quick method to derive such because the OS is the key fundamental denominator that was used to asses and derive all of the valuations.



Keep in mind that deriving the 20% value to be $1,191,700,000 for the Cinco Minas, this means that we can believe that there is a solid chance that the remaining 80% is equal to 4 times that amount too. Then added together, we can get a total 100% valuation from their confirmed resources of just this one property; the Cinco Minas.

So, before we determine that valuation for all 5 properties for SRGE, I think we should really understand the magnitude of just this one property, the Cinco Minas, a little bit more...

This means that if 20% of the confirmed gold and silver resources from the of Cinco Minas = $1,191,700,000 then the remaining 80% "could" very possibly be worth a total of...

$1,191,700,000 x 4 = $4,766,800,000

**********************************************************************************************************

So…

20% = $1,191,700,000
80% = $4,766,800,000

100% = $1,191,700,000 + $4,766,800,000 = $5,958,500,000

So… the 100% total amount of confirmed resources for the Cinco Minas "COULD" be worth... $5,958,500,000

Again, keep in mind that this is only from one property where they have confirmed resources on; the Cinco Minas. The 20%, 80%, and 100% of those per share value amounts are already reflected in the thoughts above. Those ”potential” amounts are very conceivable given the origination of the sources used of which I had posted above to review and again below towards the end of this post.



Also, important to note, it was previously mentioned in an earlier SRGE PR that the "Funders" who gave SRGE the $1.2 Million for their Cinco Minas operation is suppose to get 35% of Net Revenues for Phase I. I think that the $1.2 million and extra will get taken care of during Phase I and will become exhaustive to not affect the future valuation as I have explain why I believe so in the link/post below:
http://investorshub.advfn.com/boards/read_msg...d=79356522

The beauty about these valuations is that SRGE has already begun making millions of dollars from just this one property of confirmed resources here at the Cinco Minas. This is very different from many of the other stocks that I have done valuations on because unlike many, SRGE is already in production and generating millions of dollars. Although this post still should be considered ”speculative” in nature, it should also be understood that the odds of success and continued growth should be viewed much different from any other stock that has not started production as has SRGE.



Something else that’s awesome to note is that funding should not be an issue with SRGE moving forward as can be learned from reading the PR below indicating that they have secured $15.6 million in funding:
http://ih.advfn.com/p.php?pid=nmona&article=54109315

Also important to note is the info in the previous SRGE filings below:
http://www.otcmarkets.com/financialReportView...p;id=81362


This filing above is proof in my opinion that SRGE and the company providing the $5 million in funding knows enough about SRGE from behind the scenes to believe that shares at .35 per share is considered at a discount through their eyes and not at a premium. This leads me to believe that they believe that SRGE will be trading at some price much higher than .35 per share sometime before the timing to execute the debenture. The debenture had a 36 month time frame starting from December 14, 2010. This plan for movement is something that was known about since a very long time ago. It appears although that the time is now based on all of the positive things that are being brought by the company.

There are lots of good things going on with SRGE and there are lots of things that can be confirmed to be released for further updates just based on the previous PRs for SRGE. I think SRGE will soon begin to get noticed by major investors and major mining companies in the near term. IMHO



I think in closing for this post, it is important for all to read and understand the due diligence (DD) & posts below to know that SRGE is very real and to see the resolutions of other key issues:



Below are the mining reports that confirms SRGE’s over $1 Billion USD valuation of its confirmed resource at Cinco Minas that was recently PR-ed below:
http://ih.advfn.com/p.php?pid=nmona&article=54054364

The over $1 Billion valuation is from only 20% of the known vein system at Cinco Minas that has been tested for gold and silver. There is still 80% that has not yet been tested. The mining reports of which this $1 Billion valuation was derived are below:

Cinco Minas NI 43-101:
http://www.southridgeminerals.com/SouthridgeP...43-101.pdf

Cinco Minas La Abra Mining Reports:
http://www.southridgeminerals.com/SouthridgeP...rt2006.pdf
http://www.southridgeminerals.com/SouthridgeP...rt2005.pdf

Cinco Minas - Mill Processing Plans for 60 Tons Per Day Pilot:
http://www.southridgeminerals.com/SouthridgeP...-Minas.pdf

Cinco Minas - Mill Processing Plans for Heap Leaching:
http://www.southridgeminerals.com/SouthridgeP...-Minas.pdf

Cinco Minas – Mill Construction Pictures – Part 1:
http://www.southridgeminerals.com/SouthridgeP..._Part1.pdf

Cinco Minas – Mill Construction Pictures – Part 2:
http://www.southridgeminerals.com/SouthridgeP..._Part2.pdf

Cinco Minas – Mill Construction Pictures – Part 3:
http://www.southridgeminerals.com/SouthridgeP..._Part3.pdf

Cinco Minas – Mill Construction Pictures – Part 4:
http://www.southridgeminerals.com/SouthridgeP..._Part4.pdf



Regarding Legal Ownership of Cinco Minas Property:
http://investorshub.advfn.com/boards/read_msg...d=79599627
http://investorshub.advfn.com/boards/read_msg...d=79565513
http://www.free-press-release.com/news-minera...33273.html
http://investorshub.advfn.com/boards/read_msg...d=79561447
http://investorshub.advfn.com/boards/read_msg...d=79480771
http://investorshub.advfn.com/boards/read_msg...d=79316278
http://investorshub.advfn.com/boards/read_msg...d=79593275
http://investorshub.advfn.com/boards/read_msg...d=79593569
http://investorshub.advfn.com/boards/read_msg...d=79593656
http://investorshub.advfn.com/boards/read_msg...d=79602063

Proof SRGE Concession Titles are Very Real:
http://investorshub.advfn.com/boards/read_msg...d=79280140

SRGE Definitive Agreement to acquire a 100% interest in the "El Horconcito" Gold property:
http://investorshub.advfn.com/boards/read_msg...d=79281175

About any Dilution:
http://investorshub.advfn.com/boards/read_msg...d=79514328

About the SRGE IR being real:
http://investorshub.advfn.com/boards/read_msg...d=79537506

Confirmation of SRGE Lawyers/Legal Validating SRGE Existence:
http://investorshub.advfn.com/boards/read_msg...d=79530566
http://investorshub.advfn.com/boards/read_msg...d=79539910
http://investorshub.advfn.com/boards/read_msg...d=79539990

SRGE’s law firm is very reputable with very real clients:
http://investorshub.advfn.com/boards/read_msg...d=79539910

Other SRGE Significant DD Posts:
http://investorshub.advfn.com/boards/read_msg...d=79281175
http://investorshub.advfn.com/boards/read_msg...d=79483734
http://investorshub.advfn.com/boards/read_msg...d=79430349
http://investorshub.advfn.com/boards/read_msg...d=79426538
http://investorshub.advfn.com/boards/read_msg...d=79387363
http://investorshub.advfn.com/boards/read_msg...d=79387305
http://investorshub.advfn.com/boards/read_msg...d=79379015
http://investorshub.advfn.com/boards/read_msg...d=79195299
http://investorshub.advfn.com/boards/read_msg...id=7919494

FROM: investorshub.advfn.com/boards/read_msg.aspx?message_id=79640513