CYM 9.09% 18.0¢ cyprium metals limited

price model

  1. 3,715 Posts.
    Hello guys,

    Playing around with some numbers around a farm-in...


  2. Farm in partner would be responsible for managing the debt as it is project debt rather than company debt (although it has been guaranteed by Arc)

  3. Company would retain some level of ownership of the gold mine

    The EAS deal had them keep about 20% of the project with EAS essentially paying to get the project up and running.

    The deal, as it now includes the hedging book closed out, more debt and much worse economic conditions would see Arc at a guess keeping 10% of the mine - although the mine itself is now at the ore body and they have minerals on the ROM pad.

    The farm-in partner would pay to get the mine to production so if we look at gold at US$750/ounce we get the following figures:

    life of mine: 10 years (due to conservative probable upgrades)

    average ounces/year: 80,000 (they are looking to move from 70,000 to 100,000 once they get running)

    Cost of processing: US$450/ounce

    Project debt: US$60M

    So realistic project return for the life of the project:

    (10 x 80,000 x (750 - 450)) - 60,000,000


    So Arc's stake at 10% is worth US$18,000,000 over the life.

    With a long term average of 75 cents to the US dollar that comes to AU$24,000,000.

    So - 10 year mine life PE of 10 would be reasonable (even with a good chance of the mine being further expanded) gives a market cap of AU$24M.

    This is just for mine share at 10% however...

    They are also an exploration company with excellent other sites - probably on par with something like Excalibur (EXM) which has a current market cap of about AU$8M.

    So that would give us, between the share of the mine and the exploration side of the business at a realistic AU$32M.

    So this then gives a price target of around 22 cents per share with these sums - with a dividend averaging at about 1.6 cents per share when it comes through (or 80% of the last traded price).

    If they do better than 10% of course the whole picture changes.
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