Interesting analysis that leaves out some very relevant information.
Obviously this is a high risk high reward opportunity. As you stated they have $0 revenues currently as they are in pre-development stages. However, as disclosed publicly they are in the closing process of a very large pipeline and storage deal that they have been working on for many years. The relationships that Ward has developed cannot be underestimated or undervalued.
As stated in the press release the project is valued at $1.2 BILLION and includes the largest natural gas storage facility in North America. This is Mirage's project. Not sure many people understand that. They are choosing to sell the project to the funding partner in return for the full financing of the project. BUT Mirage will retain a 5% carried interest. What does that equate to is what everyone should be focused on. From what I have gathered it will be effectively an override of all natural gas that flows in and out of the pipelines and also that is stored in the storage facility. With no operating expenses incurred by Mirage, none at all. So the 5% would be pure profit.
Based on discussions I have had with industry folks, some are estimating that the value of the 5% carried interest will be in the $50 million to $100 million range, annually. Yes that's a wide range but we need more information to refine it. In any event the number is substantial. Also, not sure if folks know but originally the pipelines were going to be 36 inches, but the demand and the need is so great that the pipelines are now going to be 42 inches.
So the question is what is the value of Mirage today knowing that they will be getting $50M-$100M in net income annually. And to be clear, I am not talking revenues, I am talking NET INCOME.
In your post you had reservations about a market cap of $55 million. As suggested above they will be earning that each year. In using standard valuation approach, one would apply a multiple (P/E) to the net income. In any scenario Mirage should be valued at many multiples of $55M. One could say conservatively 10x or 15x or even 20x or more.
Obviously the project will take some time to build so a prudent investor would use discounted cash flow methodology to value the future income in today's dollars. But even with the most conservative assumptions Mirage would be valued many multiples from current levels. It's really unlike a biotech company that is working on a blockbuster drug. They often carry a very high valuation well before the drug even comes to market. The main factor is how certain is the future income.
Disclaimer: All of the above is predicated on the deal being fully executed and the project being built.
One other thing to add ..the numbers I am suggesting above are just for this ONE deal. From my understand Mirage is in various stages with a handful of other deals. Reread my last sentence again and ponder that for a bit.
Cheers
