Posted by: OntaREEo Date: Saturday, December 27, 2008 9:23:00 PM
In reply to: None Post # of 4726
I was taking a stab at valuing aoag based on earnings, assuming these the two projects from the ibox:
1. Norton Sound, 1.5-10M oz, or 500K oz/year, direct cost $300/oz, 80% interest.
2. Denali Onshore Placer, 60K oz/year, again direct cost $300/oz.
Since AOAG is indicating they are in production in 2009, it would be more proper to estimate earnings from revenue minus costs, then divide by shares outstanding to get an EPS, and then finally apply an appropriate PE multiple to estimate share price:
Norton Sound estimates 250K-500K oz per year, so I used the midpoint 375K/yr, times their 80% interest = 300K oz/year
Denali Placer project 60K oz/year
Total of two 360K oz gold per year
Rough estimate $300 direct costs and $100 all other costs = $400 per ounce cost to mine.
1. At $800/oz, PE 10:
[360,000 x (800 - 400)]/361,000,000 shares ~ $0.40, x 10 PE = $4.00 per share.
2. At $1000/oz, PE 15:
[360,000 x (1000 - 400)]/361,000,000 shares ~ $0.60, x 15 PE = $9.00 per share.
Does that look about right? $4 to $9? What am I missing?!
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