Supatcha Resources Inc. (SAEI)

[devilmonk]

THIS IS STERV TOP DRAWER POST CONCERNING TODAYS' NEWS....
Balamidas & All, Very Important to Expect from SAEI...

I expect for SAEI to close the acquisition of the BALKA SKYROKAYA GOLD PROPERTY that they PR-ed on 13 Sep 2010 below: Quote:
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http://ih.advfn.com/p.php?pid=nmona&article=44339819
BALKA SKYROKAYA GOLD PROPERTY:

* Property centrally located in Nikopol mining district with road access and electrical power close-by.
* 282 drill holes for 93 km of core with 11,764 assays of ore zones
* Exploration shaft to a depth of 168.4
* Gold zones are tabular near vertical veins hosted in altered mafic and felsic volcanics with interbedded iron formation
* Drilling of mineralization today concentrated on 100m by 150m grid to a depth of 450m
* Deepest intersection of zones at a depth of 700m
* Average grade of mineralization: 5.71 g/T Au
* P1 resource = 6.5 million tonnes with 1.3 million ounces
* P1 + P2 resource = 10.1 million tonnes with 1.8 million ounces
* P1+P2+P3 resource = 17.1 million tonnes with 3.1 million ounces
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The beauty about this acquisition is that it immediately and instantaneously makes SAEI to be worth somewhere in the area of $60.31 per share. I will explain how, but I think you must first understand just what it is that SAEI is acquiring and why they should not have any problems in completing this acquisition.

All of the bullets above are important, but notice the bullets above that I have in bold. They have already drilled 282 holes for 93 km of core with 11,764 assays of ore zones. The exploration shaft is to a depth of 168.4m. THIS IS A MINE THAT THEY ARE ACQUIRING!

This makes SAEI immediately and instantaneously operational to begin producing gold. Notice that the combined resource of properties 1, 2, and 3 totals 3.1 million ounces. This is already confirmed and I will come back to explain why this is very important to make SAEI worth $60.31 per a little later, but first I think we must understand the importance of the terms of this acquisition to better understand how we are locked into a continued pattern of growth in my opinion…


Quote:
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Under the terms of the agreement, Supatcha Resources Inc. may earn up to an undivided 90% interest in the Balka Skyrokaya gold property. Supatcha may acquire a 50% undivided interest in the property by making cash payments to Balka Skyrokaya Ltd. of $2,000,000 over four years, with all or part of the payments being made in Supatcha stock. To earn the 50% interest Supatcha must also complete work on the property in the amount of $5,000,000 over five years, with $500,000 being spent on the property in the first year of the agreement. After earning the 50% interest, Supatcha can then acquire an 90% interest by making additional cash payments of $1,500,000 over four years (again with all or part of the payments being made in Supatcha stock equivalent, using a 20 day value weighted average price) and completing additional work on the property in the amount of $3,000,000 over four years. All payments and work may be made or done at the sole discretion of Supatcha.
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Now pay particular attention to what is in bold above as I will repost it separately below:

Quote:
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…with all or part of the payments being made in Supatcha stock. …

And…

…(again with all or part of the payments being made in Supatcha stock equivalent, using a 20 day value weighted average price)…
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That part is important and is one of the main reasons for the stock buyback in SAEI in my opinion. It is in the company’s best interest to buy back shares of SAEI to get the price as high as possible because they can use less stock to acquire the property the higher the prices are for a consecutive 20 day period. This is why buying shares even at these levels in the company’s eye’s or even at much higher prices is a ”win win” situation for everyone.

To now explain why I stated that this acquisition makes SAEI immediately and instantaneously worth $60.31 per share is because of the 3.1 million ounces of gold that is already confirmed from the property. Simply consider the price of gold being over $1300 per ounce to derive below…

3,100,000 ounces of gold x $1300 = $4,030,000,000 in Revenues

Now consider the same logic for the valuation models I explained within the SAEI gold and silver valuations below:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=57307565

$4,030,000,000 x 25% Net Profit Margin = $1,007,500,000 Net Income

To derive an Earnings Per Share (EPS), we need to know that the Outstanding Shares (OS) is 61,000,000 shares, but I think we need to factor in the amount of shares that would be required to acquire the property. At today’s price of roughly in the .50 per share area, I think it would definitely be maintainable to pay the $3,500,000 in cash or stock to acquire the 90% interest of the property. Let’s presume that as a worst case scenario that they will use all stock. Then that will mean that $3,500,000 ÷ .50 = 7,000,000 shares to be added to the OS. That brings the total OS to around 68,000,000 shares. Let’s keep in simple in case I missed something and just round the OS to be 70,000,000 shares.

$1,007,500,000 = Net Income
70,000,000 shares = OS

So…

$1,007,500,000 Net Income ÷ 70,000,000 OS = EPS

$14.39 = EPS

Again, consider the same logic for the valuation models I explained within the SAEI gold and silver valuations below to understand why I will use 12 as a conservative P/E Ratio:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=57307565

12 P/E Ratio x $14.39 EPS = $172.68 per share SAEI price value

The agreement reads to be over a 5 year time frame for capturing the work to be done so I think it’s fair to presume that the $172.68 is not within a 1 year time frame, but over the life of 5 years. That means that the share price from the acquisition is fundamentally worth…

$172.68 ÷ 5 = $34.54 per share

Again, from the gold and silver valuation post below from the property already owned by SAEI, it was determined that SAEI should fundamentally trade at $25.77 per share:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=57307565

So in adding the fundamental valuation of both properties together, you get the total below for where SAEI should fundamentally trade…

$34.54 + $25.77 = $60.31 per share

Other support will come from private support to fund SAEI on the front end that I think will be compensated from the back end through some form of a royalty payment that us as investors won’t see or will maybe never hear about such details. I think we will be told just enough to know that the company has funding and plenty of it. The most that we will see will be in the form of the company receiving more nondilutive financing or something like how announced their previous $10 million in funding was delivered. I think these are the investors buying the shares in SAEI now knowing that they will get paid once it trades into its higher valuations as I have posted above that will be fundamentally confirmed from the completion of this acquisition. This is simply putting your money where your mouth is at its best. Now throw in a conference call on 20 Dec 2010 by the company to explain it all.

For inquiring minds, the 25% Net Profit Margin leaves a 75% Net Expense Margin that I more than believe captures the 10% remaining to be paid from the 90% of the value existing from having acquired 90% of the property according to the terms of the agreement. So the valuation above stands.

I must say this again, in closing… please understand, I have done valuations on many companies and it meant nothing for where the company ended up trading or existing… good or bad. It is going to not matter what I post as any valuation, but instead, it will matter what the company execute with their business objectives of growth to confirm the ”potential” I have posted to exist. If SAEI does nothing to prove to the market that they are completing their goals for growth as I have posted above, then who knows where SAEI will trade. However, if they execute their goals as they have positively shown so far for being very much on track for executing, then I expect SAEI to trade at or above that price value I mentioned above.

I believe we are Golden here with SAEI!

v/r
Sterling