Replies to post #20730 on Supatcha Resources Inc. (SAEI)

[trader01117]

Nice post! thanks.

[tvmetguy]

Excellent post:

From my experience we will go to $50-60/oz on the proven and probable gold found in the 43-101.

1M ounces of gold found is a $60M market cap
2M ounces of gold is a $120M market cap.

This is for .OB companies.

[Hawksfan]

$12.65 a share? SWEET!!!

[ourlarsy]

Excellent post. Thanks again for all you continue to provide to this board.

[patchman]

OMG…How did you derive these numbers?

First, the company has no mining assets, employees, or capital to use to begin operations. They haven’t even started to mine any property. They haven’t even started mining the property they took possession of in 2007. So how do you take the existing share structure and extrapolate out the entire future mining potential of this company based on the existing structure when it is clear they need to raise capital to mine and like most financing deals, including the present financing agreement, they come as convertible debentures (i.e. dilution in shares not yet taking place). How much up front capital do you estimate it takes to even begin mining property (payroll, capital equipment, permits, etc….) When will it commence? It has already been 7 months since April 2010.

Do you really think the entire mining potential in dollars will be valued over the existing 61 Million structure? Really? Is there any proven history to this lack of dilution with zero dollars and some huge outstanding debt (unpaid properties/loans)? You realize that, as an example, the company still owes 500,000 shares for the property they haven’t yet paid for – i.e. dilution? And that $10 million loan out there with Melco and starting due in 17 months (24 months from first borrow point), factoring in the 5:1 forward split (deal was pre-split so don’t think that $2.00/share cost still applies) prices the shares at $0.40 - $0.50 or somewhere North of 20 million shares. And they still haven’t started mining.

So based on this theoretical valuation, where exactly is your valuation factoring for required financing to begin operations, negative margins at start up, operating expenses during the initial operating loss quarters, or do you really think they will start up this mine at 25% profit margin on day 1. If you have historical research on mining operations and their start up costs and margins that would be extremely helpful as they are as pertinent as these P/E ratio’s and margins you are proposing.

How many years do you think this will take as well? Your factoring assumes that this will all yield in a single year which we know it won’t. For example, $3 Billion over 10 years would create a vastly different PPS than $3 Billion over 1 year. If the company is a $300 Million per year producer it is not going to price at $3 Billion. That all factors into the P/E ratio’s used correct? EPS is trailing 12 months and P/E is also trailing 12 months so what exactly is the 12 month mining values not the life of the mine? If you disagree, look at how they value real companies and compare apples to apples.

Now, to all those that will not like this post, congratulations on this run and remember, never fall in love. With 3.7 Million shares traded, somebody sold 3.7 Million shares at these prices and you are buying them. What do they know?

[zenyattadvd]

i heard they are expecting over 4,000,000 ounces in GOLD

[GoldHitter]

Pls stick this post by stervc

[buccaneer1961]

great dd here!!

[patchman]

OMG…How did you derive these numbers?

First, the company has no mining assets, employees, or capital to use to begin operations. They haven’t even started to mine any property. They haven’t even started mining the property they took possession of in 2007. So how do you take the existing share structure and extrapolate out the entire future mining potential of this company based on the existing structure when it is clear they need to raise capital to mine and like most financing deals, including the present financing agreement, they come as convertible debentures (i.e. dilution in shares not yet taking place). How much up front capital do you estimate it takes to even begin mining property (payroll, capital equipment, permits, etc….) When will it commence? It has already been 7 months since April 2010.

Do you really think the entire mining potential in dollars will be valued over the existing 61 Million structure? Really? Is there any proven history to this lack of dilution with zero dollars and some huge outstanding debt (unpaid properties/loans)? You realize that, as an example, the company still owes 500,000 shares for the property they haven’t yet paid for – i.e. dilution? And that $10 million loan out there with Melco and starting due in 17 months (24 months from first borrow point), factoring in the 5:1 forward split (deal was pre-split so don’t think that $2.00/share cost still applies) prices the shares at $0.40 - $0.50 or somewhere North of 20 million shares. And they still haven’t started mining.

So based on this theoretical valuation, where exactly is your valuation factoring for required financing to begin operations, negative margins at start up, operating expenses during the initial operating loss quarters, or do you really think they will start up this mine at 25% profit margin on day 1. If you have historical research on mining operations and their start up costs and margins that would be extremely helpful as they are as pertinent as these P/E ratio’s and margins you are proposing.

How many years do you think this will take as well? Your factoring assumes that this will all yield in a single year which we know it won’t. For example, $3 Billion over 10 years would create a vastly different PPS than $3 Billion over 1 year. If the company is a $300 Million per year producer it is not going to price at $3 Billion. That all factors into the P/E ratio’s used correct? EPS is trailing 12 months and P/E is also trailing 12 months so what exactly is the 12 month mining values not the life of the mine? If you disagree, look at how they value real companies and compare apples to apples.

Now, to all those that will not like this post, congratulations on this run and remember, never fall in love. With 3.7 Million shares traded, somebody sold 3.7 Million shares at these prices and you are buying them. What do they know?

[balamidas]

HUGE dd Sterling !!!thank U !added the dip big time !

best regards

[SilverSurfer]

stervc,

looking at the SAEI website where it describes the deal for the properties and then the last 10Q ,,, I am not seeing certainty that the sites are in the bag. But you do? TIA hge

[stervc]

SAEI Gold & Silver Valuations…

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:
http://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:

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

Consider now that the price of silver is over $28.00+ per ounce as confirmed below:
http://www.kitcosilver.com/charts.html

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.

v/r
Sterling