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Estimating Orko Silver Fair Market Valuation
By Dennis Boyko
Created on: March 10, 2010
Current version: 2.2.1: November 5, 2010 -- removed comments.
Metrics have been updated with closing prices available on 2010-Nov-25.
Fair Market Valuation Summary - 2010-Nov-25
Projected fair market stock price for Orko Silver Corp., based on the current NI 43-101 resource disclosures, is C$2.88. The actual closing stock price was C$2.49.
Details
Based on the close of trading on 2010-Nov-25, the current and projected Market Capitalization per ounce of Silver Equivalent for Orko Silver Corp., considering Orko Silver's share of the La Preciosa property, were:
•current market valuation: US$5.37 per ounce of Ag Eq.
•projected valuation as junior silver producer: US$6.75 per ounce of Ag Eq.
•estimated valuation at start of production: US$6.89 per ounce of Ag Eq.
The projected fair market valuation of Orko Silver Corp., in production, is expected to lie somewhere between a point on the Junior Silver Producer Valuation Line and a point on the Major Gold Producer Valuation Line based on the fact that:
?the deposit size and the deposit silver grades are well beyond those typically associated with junior silver producers,
?the deposit joint venture operator is a major silver producer with an excellent track record of mine development.
?the deposit's in ground metal value includes 6.5% from in ground gold.
Projected fair market stock price for Orko Silver Corp. is derived using the estimated valuation at start of production of US$6.89 per ounce of Ag Eq (as derived above) and the following assumptions:
•Capital Expenditure to reach production: US$0M -- the Pan American joint venture agreement carries Orko Silver into production,
•Risk Premium: 0% -- 0% applied to the estimated capital expenditure,
•Discount Factor: 10% -- discount between present and start of production. This value may be somewhat optimisitic since 53% of the in ground metal value is in the Inferred category.
The discounting of the future gold and silver metal prices after the start of production are already fully accounted for in the Junior Silver Producer Valuation Line and the Major Gold Producer Valuation Line which are both derived from current day market prices and company fundamentals.
