Sterv, with these careful valuations, is SAEI a buy, sell, or hold on December 14, 2010?
The previous valuation post below that I had created did not take into account the huge amounts of silver owned by SAEI and was predicated upon SAEI gold only from the information that was publicly provided to derive the share price I indicated where it should fundamentally trade after they release their announcement of their NI 43-101 being completed and filed by 5 Dec 2010 as from what was PR-ed: investorshub.advfn.com/boards/read_msg.aspx?message_id=57157583
Within that SAEI Gold Valuation post above, there were some key factors that I mentioned and/or noted to presume that I will note again below to presume here with the SAEI Silver valuation too:
Quote: Key Factors to Presume: 1-The factoring concluded within the gold valuation post above clearly mentioned that the $151.80 per share price would not yield such value in a single year. It was clearly explained how the SAEI total gold produced was yielded over a 7 year time frame. This is why I divided the $151.80 by 7 to derive the $21.68 per share price gold valuation for SAEI. 2-Used a 25% Net Profit Margin. With using a 25% Net Profit Margin, that means that there’s a 75% Net Expense Margin to cover all costs; jumpstarted from their $10 million received in funding. 3-Used a 12 conservative P/E Ratio although could have used one higher considering the ”Basic Materials Sector” for where the mining companies exist currently has a 14.72 P/E Ratio as verified below: http://biz.yahoo.com/p/1conameu.html 4-The data used to derive those calculations are speculative or ”potential/probable” until the NI 43-101 has been completed and filed. Then the data will be considered ”proven” for the SAEI gold and silver valuations. 5-SAEI must be real since they have PR-ed that they have received $10 million in funding and have started an 8-month drill program on 9 Sep 2010 while releasing Phase I and Phase II drill results. So it is very apparent that the required financing is already in place to have begun operations already. 6-The Earnings Per Share (EPS) was derived from using basic accounting procedures [where Net Income ÷ Outstanding Shares (OS) = EPS] that will be filed within the company’s financials once achieved. This is what the fundamental assessment will stem from. 7-Under the presumption that there will be minimal to zero dilution as it appears that those financing SAEI have agreed to be paid through some type of royalty program and minimally from shares of the company in any significant proportion.
SAEI has reported within their website that the historic result at Barlevskoye and Vynohradiv for silver was 31.6 grams per tons of silver ("g/t Ag"). With the gold valuation above, I could have easily used the 20.89 g/t average for the 8 holes from the SAEI Phase II drill program that is still ongoing as we speak, but instead, I used the more conservative historic number of 3.6 grams per tons gold ("g/t Au"). So, here with this silver valuation for SAEI, I will use the conservative historical 31.6 grams per tons of silver that was used for the same location too.
Also, within that gold valuation post above, I clearly explained how I could have use 7 times greater the amount of tonnage used to derive the gold valuation, but again, I will use the historic and yet conservative 18,709,300 tons. So…
18,709,300 tons x 31.6 g/t of silver = 591,213,880 g/t of silver
As explained above in my gold valuation post… 1 gram = 0.0352739619 ounces
591,213,880 g/t of silver x 0.0352739619 ounces = 20,854,455 ounces of silver
20,854,455 ounces of silver x $28.00+ per ounce = $583,924,740 worth of silver
Now let’s use the 25% Net Profit Margin as I had explained within the SAEI gold valuation post above to derive the Net Income to be generated from silver:
$583,924,740 x .25 = $145,981,185 Net Income
Now to derive an Earnings Per Share (EPS), you have to use the following formula as I had also previously mentioned…
Net Income ÷ Outstanding Shares (OS) = EPS
Net Income = $145,981,185 OS = 61,000,000 OS
$145,981,185 Net Income ÷ 61,000,000 OS = $2.39 EPS
This is also huge. Now let’s multiply this $2.39 EPS with a Price to Earnings (P/E) Ratio to still get the share price for where SAEI should be trading based on its silver. I will use 12 as a conservative P/E ratio for the same logic as I had explained within the SAEI gold valuation post above. This means that the share price of SAEI, just based on its silver alone, ”could” fundamentally trade at the share price derived below…
12 Conservative P/E Ratio x $2.39 EPS = $28.68 per share value for SAEI
Remember, as like I had explained within the SAEI gold valuation post above, this amount is not captured over the course of one year, but must be divided by 7 to show that this is the amount captured per year over a 7 year time frame based on the logic I explained within the SAEI gold valuation post above. So this means that we must divide the $28.68 per share silver valuation by 7 to equate to $4.09 per share annually.
This means that from the $4.09 per share annual silver valuation here with SAEI, we can add the previously derived $21.68 per share annual gold valuation to get a combined ”silver plus gold” valuation of $25.77 per share.
This means that upon the release of their completed NI 43-101, SAEI should fundamentally trade at a minimum… $25.77 per share.
I have to mention again that 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.
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