AAM 0.00% 2.0¢ australian industrial minerals limited

question, page-2

Currently unlisted. Proposed listing date: WITHDRAWN
  1. 1,226 Posts.
    high grades are anywhere over 15 grams per tonne, low would be around 2-3 grams per tonne.. i think decent amount i would like to see is at least over 6-8 grams per tonne - but its not all about the grade.

    For project costs well that would depend on how low below ground the resource is, the infrastructure involved, where the project is, refinery and seperation costs, and the total resource amount being mind - thats not jsut for gold thats for everything.

    From the AGM meeting 63 grams per tonne is bonanza, but check out EXM bonanza'z figures - . EXM as a comparison has a resource bank of 1.1 million tonnes at 6.57 g/t for 235,971 oz AU. AAM has 21,512,621 million tonnes at an average of 2.5 g/t for 1,713,900 oz AU. ANOTHER factor is that AAM is a PRODUCER WITH RESERVES OF 1,159,054 million tonnes at 4.2 g/t for 150,163 oz AU. However AAM is a producer.

    the current gold price is around http://www.goldprice.org/ $1134 per oz and operation cost per oz is $600; thus profit per oz = $534. 150,163 of probable reserves times $534 = 80,187,042. This is expected to be produced over 4 years and im going to use a discount rate of (7.78% (their floating i/r + inflation of 1.3% + errors and future figures) 11.4%.

    PV lump sum = 80,187,042 / (1.114)^4 = 52,067,105
    no. shares = 170,386,175 (per 15th december annoucement)
    = PV per share of = 0.305; take into costs reflecting project costs before production of 6 cents per share = an NPV of 24 cents per share based on probable reserves and production within the next 4 years.

    This is what the project expects the cashflow to be at the present. Clearly the market values the share higher due to strong cashlow postion and the life of the project. My discount rate is probably a little high.. so i think that the shareprice is probably valued correctly.

 
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