This needs to be a sticky, incredible DD. THE MAN HIT THE NAIL ON THE HEAD!
Key Valuation/Highlights from SRGE 2012 Annual Financials…
One might have read the PR below and wondered what is it that SRGE has that would make two NYSE companies be interested in buying our or doing a Joint Venture (JV) with SRGE. The SRGE recently filed Annual Financials confirmed the reason why such would logically considered. Below are some things of which are significant to note from the SRGE Annual Financials to understand the ”potential” valuation that is being considered through the eyes of the NYSE companies in my opinion that makes them want to do a deal with SRGE. Please consider below as I will try to elaborate in greater detail to reflect this:
Proven (Measured) and Probable (Indicated) Ore Reserves and Inferred Ore Reserves for the SRGE Cinco Minas property from the resource estimate done by Behre Dolbear de Mexico:
Measured/Indicated Gold = 89,100 oz Measured/Indicated Silver = 12,500,000 oz
Gold = approximately $1,700.00+ per ounce as of 12/17/2012 http://www.kitco.com/charts/livegold.html Measured/Indicated Gold = $1,700.00 oz x 89,100 oz of gold Measured/Indicated Gold = $151,470,000
Silver = approximately $32.00+ per ounce as of 12/17/2012 http://www.kitco.com/charts/livesilver.html Measured/Indicated Silver = $32.00 oz x 12,500,000 oz of silver Measured/Indicated Silver = $400,000,000
Total Measured/Indicated Gold & Silver = $551,470,000
Inferred Gold = 13,800 oz Inferred Silver = 1,800,000 oz
Gold = approximately $1,700.00+ per ounce as of 12/17/2012 http://www.kitco.com/charts/livegold.html Inferred Gold = $1,700.00 oz x 13,800 oz of gold Inferred Gold = $23,460,000
Silver = approximately $32.00+ per ounce as of 12/17/2012 http://www.kitco.com/charts/livesilver.html Inferred Silver = $32.00 oz x 1,800,000 oz of silver Inferred Silver = $57,600,000
Total Inferred Gold & Silver = $81,060,000
Total Measured/Indicated Gold & Silver = $551,470,000 Total Inferred Gold & Silver = $81,060,000
Overall Total Gold & Silver = $632,530,000
The above amount of $632,530,000 for the Overall Total Value is derived from the "Behre Dolbear Report" data that was derived from a 2004 resource estimate that was prepared on the ”Cinco Minas” summation of proven (measured) and probable (indicated) ore reserves and from the inferred ore reserves owned by SRGE. Again, Behre Dolbear is one of the most respected mining advisory firms in its industry. This estimate done by ”Behre Dolbear” de Mexico was based on the drilling, trenching and field exploration since 2003. Below are some thoughts to understand the positive credibility that exists from a report being done by Behre Dolbear:
The Total Revenues from the Cinco Minas property for the gold and silver confirmed by ”Behre Dolbear” is expected to be $632,530,000 as previously explained.
Although we don’t know the Net Expenses, we can use the information below for the Gold Industry standard until more is released from the company to confirm something different. The Yahoo link below reflects a [b[Net Profit margin for the Gold Industry of 24.00%: http://biz.yahoo.com/p/134conameu.html
If the Net Profit Margin is 24% then the Net Expense Margin is 76%. Now we can derive Net Income as indicated below:
Net Income = $632,530,000 x .24 Net Income = $151,807,200
Now we must divide the Net Income amount by the SRGE Outstanding Shares (OS) to derive an Earnings Per Share (EPS). The last update within the company’s Annual Financials filed on 15 Dec 2012 states that the SRGE OS is 545,874,868 shares. Now let’s move forward to consider below for deriving an EPS…
EPS = Net Income ÷ OS EPS = $151,807,200 ÷ 545,874,868 OS EPS = .278 per share
Now to determine a fundamental valuation of where SRGE could be trading if this amount for Net Income is captured, we must multiply the EPS by the Price to Earnings (P/E) Ratio for the industry in which it would trade which in this case would be the Gold Industry. As indicated below, 21.20 is the P/E Ratio for the Gold Industry: http://biz.yahoo.com/p/134conameu.html
Now let’s derive a share price of where SRGE could fundamentally trade now that we have our EPS:
Expected Price Per Share = EPS x P/E Ratio Expected Price Per Share = .278 x 21.20 Expected Price Per Share = $5.89 per share
For inquiring minds, this is the logic of which justifies why a NYSE company would be considering buying out SRGE or even doing a JV with them. With SRGE having a ”Fundamental Valuation” from their Cinco Minas property of $5.89 per share, gives the SRGE Market Capital in the amount as indicated below:
$5.89 x 545,874,868 OS = $3,215,202,972
The current SRGE Market Capital with SRGE trading at a rounded off price of .01 per share is as indicated below:
.01 x 545.874,868 = $5,458,748
That’s a difference in Market Caps as indicated below:
$3,215,202,972 ÷ $5,458,748 = 586.1 times undervalued
This means that SRGE trading at .01 per share could be considered ”Fundamentally Undervalued” 586.1 times less than the ”potential” valuation that was derived from the proven (measured) and probable (indicated) ore reserves and from the inferred ore reserves owned by SRGE.
Below are also more key highlights from the SRGE Annual filings that should not be ignored:
http://www.otcmarkets.com/otciq/ajax/showFinancialReportById.pdf?id=96742 ** The Outstanding Shares (OS) is 545,874,868 shares as of December 13, 2012. ** The Authorized Shares (AS) is 1,500,000,000 shares as of December 13, 2012. ** SRGE is one of the very few penny stocks that are profitable. ** The Revenues for its fiscal year end 2012 = $3,148,692 ** Net Income = $919,438 ** Earnings Per Share (EPS) = .0011 ** Total Assets = $30,705,471 ** Total Stockholders’ Equity = $16,327,938
Also, for inquiring minds, if one were to research the definitions of proven (measured) and probable (indicated) ore reserves and Inferred ore reserves, you can do so from the Canadian Institute of Mining (CIM) link below: http://www.crirsco.com/nat_canada.pdf
Upon doing so, one should now easily see how the valuation of what SRGE owns is very huge which would definitely attract NYSE companies to be a part of or acquire.
Stervc, the Behre-Dolbear is NOT a feasibility study. I am not certain why you don't comprehend this but you seem to think Tumi commissioned a feasibility study and they didn't.
For a feasibility study a comprehensive drilling program would have to be done and B-D didn't do any drilling.
What B-D did was a scoping study. Here is the difference: "Given that Inferred resources have a greater uncertainly associated with them, a scoping study relying on Inferred resources in going to have a much higher degree of uncertainty associated with it than a feasibility study limited to reserves and Measured + Indicated resources would have."
Straight from Tumi Resources:
Therefore you cannot do a valuation based on a scoping study - you are using numbers that can't be confirmed. What you have done is nothing more than guess work.
NO NYSE company would work on a deal with a sub-penny company that has gagged the TA, NO audited financials since 2007 and a very shady past without a detailed feasibility study.
Stervc, you can't publish your post as DD when it is not based on facts.