A simple analysis of private market value, i.e.what would someone be willing to pay to acquire ALMI? Keep in mind that the halloysite deposit is a wasting asset. What is sold cannot be replaced.
Some months ago I had tried to calculate what per share earnings might aggregate over the next seven years as the deposit is depleted. I had come up with $5 to $7 per share. I can't find those calulations and don't feel like recalculating.
The question is what would an investor pay for an asset that would run out in 7 years but conservatively return $5.00 in that period of time. There are lots of answers to that question, none necessarily correct. If, an investor was, say, looking for a 20% return on his investment and felt confident that he would make about 71 cents a share over the next 7 years, then he would be willing to pay about $2.65 a share today. A self amortizing loan of $2.65 at 20% interest, would generate about $4.95 over 7 years.
There are a lot of flaws in the foreging analysis, e.g. it is not likely that the earnings would flow evenly over the 7 years- more likely they would be more like a parabola (bell curve) generating less in the beginning and at the end as the deposit was depleted and more in the middle. Earnings might be significantly greater (or less). An investor might be willing to accept a lower return, etc. Anyway, I just like doing exercises like this. I am sure many can find fault with it and many are capable of much greater refinement. But if you are willing to accept my very conservative estimates then the stock is worth at least $2.65 today.
