Cotton & Western Mining Inc. (CWRN)

[DevilDolphin]

A footnote from the last CWRN FINS released October 2009...

Accompanying notes are an integral part of the financial statements.

¹Iron ore mineral rights 2008, Baja Pacific No. 4, 5, 7, 8 and 14 Located near Ensenada, Baja California, Mexico.

Baha 14 Mineral Rights - Belong to CWRN aka Share Holders.

Since that time the outstanding shares have been reduced by 1 Billion shares and since that release there have been no splits. Last split was in October 2008, almost 4 years ago, before CWRN was generating revenues from production.

If CWRN were to perform a split I would presume the smart way to do it would be to start a buyback while shares are cheap, then file financials for last 2 years to allow the stock to achieve an actual fair market value for the company with a fair P/E ratio and lastly in order to meet guidelines for higher market such as NASDAQ perform a reverse split of 10:1.

If my rough calculations are correct w/o buying back shares and just releasing audited financials a fair market value would be $540-700 million dollars or .125-.188 per share on the lower value and .162 - .244 on the high side, which would take into consideration sales from ore already sold, equipment owned by CWRN, ore in the laydown mined and ready for sale, and in-ground reserves that have been proven which I will take a shot in the dark and guess somewhere in the range of 3 million tons now proven at $3 per ton in ground, (I believe this is a very fair and yet extremely low estimate of reserves proven from drilling however for the sake of keeping things very realistic this is the value I will use.)

This would mean a P/E ratio of 10 or 15 which I have used above in factoring the PPS for both low and high estimates which I believe is a very Low P/E for a micro/subpenny breaking out on financials using these numbers.

I also have left out all of the other properties that CWRN has mineral rights to and inferred and estimated reserves on all of CWRN's properties to base a value on what we know CWRN is actively involved in mining and not what is just being held in CWRN accounts.

My conclusion is that if CWRN has shipped and/or sold $12 million in ore for the year 2012, has mined reserves estimated to be valued at $24-30 million in the laydown yard (200-250k tons * $120 per ton is $24-30 million), Equipment Value estimated $6-8 million, and estimated reserves of 60-100 million tons still underground at a fair value of .10-.20c per ton ($12-20 million which is super super low for that kind of actual potential value if a buyout were in writing) would place actual value of CWRN at $54-70 million dollars.

Factor in a reverse split of 10:1 and the stock would trade around the $1.25-$1.62 mark. This would be a price we would see today if financials were current factoring in the P/E and split. If we used a P/E of 15 PPS would be $1.88 - $2.44 per share.

(Low end estimates being that of a financial statement valueing CWRN at $54 million and high end estimate of fins putting CWRN value at $70 million, a 10-15 P/E and a 10:1 reverse split.)

Without any doubt an increase in sales and additional growth, such as mentioned in regards to BAO Steel Inc. financing and building a beneficiary plant and shipping increase for the upcoming business year of 2013 would help lift CWRN stock to over $2 PPS with as mentioned appropriate P/E and 10:1 split and would easily qualify CWRN for a serious uplisting.

Higher exchange = New investing groups which operate on a different caliber than most penny traders.

OMRI contract in work, with sales for the this year to come shortly and additional sale of high grade iron ore to China will increase this estimate exponentially as we are still a small start up production company.


DevilDolphin