Good reminder about the operating leverage of high-cost miners to a rising price. In addition to valuing miners on cash flow multiple, ever considered them as NPV of P&P reserves?
Oh ok. In the gold mining space I've seen equities valued at NPV with a 10% discount rate. I was not aware that pre-rev junior miners typically trade at 10% to 20% of P&P value. Is that the case or have I misunderstood? And if so, how do you value the P&P...just apply the spot price or a reasonable forward price?
2nd the ESG comment - I learn something every time I slow down and take the time to really read these - this and jared dillian's daily dirtnap are my favorite finance pubs
Order a Portillos Italian beef sandwich, lie down in bed for a couple of hours and the urge to buy SBSW will soon pass.
Good reminder about the operating leverage of high-cost miners to a rising price. In addition to valuing miners on cash flow multiple, ever considered them as NPV of P&P reserves?
Yes, in one of my previous articles, I valued SBSW at 10% of P&P, I think that's how I got in the $25 range.
Why 10%?
Just being conservative, in aggressive bull markets, assets can trade closer to 20%
Oh ok. In the gold mining space I've seen equities valued at NPV with a 10% discount rate. I was not aware that pre-rev junior miners typically trade at 10% to 20% of P&P value. Is that the case or have I misunderstood? And if so, how do you value the P&P...just apply the spot price or a reasonable forward price?
my largest holding. good points on the esg, something i also haven't considered.
2nd the ESG comment - I learn something every time I slow down and take the time to really read these - this and jared dillian's daily dirtnap are my favorite finance pubs
Fantastic post!