Value Microcaps Motherboard

[cliffvb]

EZM is poised for terrific numbers in 2007. I estimate they will earn nearly 70c, which gives them a forward PE of a little over 3. This assumes that copper prices will average $3.20/lb in 2007 and zinc will average $1.50/lb in 2007. They could actually lock in those copper prices right now in the futures markets since that is the average price of copper futures over the course of the year in '07.

Here's how I see it:

Company expects to produce 193 Million lbs of copper in '07. 9% of that is hedged at $3/lb.

176 mil lbs x $3.20/lb= $563 Million
17 mil lbs x $3/lb= $51 Million
Total= $614 Million

Production costs are estimated at 80c/ lb
193 Mil lbs x$.80= $154 Million

Estimated 2007 Copper operating profits= $614-$154=$460 Million

2007 Zinc production is estimated at 148 million lbs. Company estimates their production and smelter costs net of byproduct credits to be 46c/ lb. At a selling price of $1.50/ lb they would make $1.50-.46= $1.04/lb.
Estimated 2007 zinc operating profits=$1.04x 148 Million lbs= $154 Million

Together, copper and zinc would produce $460+$154=$614 Million in operating profits.

Now deduct overhead and other expenses:

Depreciation and Amortization= $40 Mil
General and Administrative=$15 Mil
Exploration= $10 Mil
Interest= $5 Mil
Total overhead= $70 Million

$614 Million- $70 Million= $544 Million- net profits before tax.

Deducting an estimated 30% for taxes and this is only an estimate (Canadian company with some credit for foreign operations)

$544 Million - 544x.3= $381 Million

Assuming 560 Million diluted shares, that works out to 68c/ share of fully diluted earnings in 2007. That is a PE of 3.4

Please feel free to point any errors that I may have made in these calcs.