** Note copied from another board and is analysis of individual, not an institution.
"Because I used the average production for full production years 2010 - 2014, then moved the pre-capex (2008 and 2009) to [Capex] field (which gets factored into the [Forward P/E] calc). Because I am interested in the sustaining rate of production, as I know they will continue to move [Inferred] into [Reserves] interim to 2014. And I didn't even give any credit in my Miningpedia calc to the potential extra cash that will be generated from production in 2009.
So you can be confident that the $3.51 cash cost and $11.7 million cash flow (at current metal prices, to drastically improve as metal prices rise), is a very accurate and conservative calculation.
This is why people are misunderstanding the feasibility press release. They are only focused on the low NAV, which is as I explained in prior post, nearly meaningless for vein mining. For vein mining, it is relevant to focus on the sustainable mining production rate at full production. That is what I have calculated.
Also regarding the [Cash], with a $1.2 million burn rate (including capex ongoing, per phone call to SEG) looks like SEG.TO can make it 5 months without needing more cash, and in that 5 months they will reach 2/3 production rate (600TPD) and thus be receiving cash from production. So looks like they won't need to raise, barring any production problems that arise. Terry had indicated he felt they could obtain short-term loan if problems do arise, maybe he even meant private party loan...I did not probe him deeply on that.
[B]Jason I will probably make my writeup on SEG, a tutorial on vein mining valuation and using Miningpedia, so that it has 3 purposes[/B] :D
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SEG.TO has [Forward P/E] of 2.6, for full production from Q3 2009 forward
These calcs are at current metal prices for today. Miningpedia dynamically updates these calcs every 15 minutes.
I am now very confident of these numbers:
[url]http://miningpedia.com/?s=SEG.TO[/url]
The average [Fwd. Annual Cash Flow] for years 2010 - 2014 (and beyond as they convert Inferred to Reserves interim) is:
$11,746,908
The [Market Cap] is:
$30,306,791
$30,306,791 / $11,746,908 = 2.6
The reason that Miningpedia has [Forward P/E] = 1.09 as of today, is because Miningpedia is using the [Net FD MCap] + [Cash] instead of [Market Cap]:
$5,553,389 + C$5,700,000
That will only be true if the [Warrants Cash] is received ([Warrants] are exercised in November for $2), which I do not think is likely. Thus I think 2.6 is the more correct value to assume for [Forward P/E].
Note the Gold was not included in the calculations, and will probably improve the results by 5 - 10% as they are recovering Gold now. We await the recoveries and smelter terms on the Gold. As well, remember that the grade from channel sampling coming out of the mine appears to be higher than the Reserves estimated from diamond drilling, thus there is potential upside on grade as well.
Even so, that is ridiculously low for silver producer. SEG will reach 2/3 production rate by end of 2008, and full production by Q3 2009. Given the huge bluesky exploration potential (only 1% of property explored, finding new veins already on stepout drilling, bonanza silver at North zone), I think a P/E of 10 is very realistic by 2009 as interest returns to the junior sector. There just are not many producing silver mines. This is a rare eagle.
So I think a 2 - 4 bagger is probable within next 12 months. The upside is P/E of 15 or so with some exploration or acquisitions news from SEG, so 6+ bagger in next 12 months is not impossible. We know SEG is doing stepout drilling now.
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$3.51 per oz of Silver [Cash Cost]
[url]http://miningpedia.com/?s=SEG.TO[/url]
Click "Edit" button next to [Cash Cost] field for Silver after clicking "Edit" button for SEG.TO:
[QUOTE=shelby2][Payable Production] values have changed, so update the prior calculation as follows.
Average of annual operating cost, G&A overhead expenses, and sustaining capex, after full production is attained by Q3 2009, for years 2010 through 2014, is,
Operating: $10,978,522
Expenses: $3,121,207
Capex: $1,049,138
---------------------
Total: $15,148,867
And we deduct the by product credits using our values for their [Cash Cost] and [Payable Production]:
Zinc: 6,754,837 lbs x $0.85 = $5,741,612
Lead: 8,744,648 lbs $0.75 = $6,558,486
------------------------------------...
Total: $12,300,098
Thus I get a total cost for producing the Silver:
$15,148,867 - $12,300,098 = $2,848,769
So we divide the production cost by the [Payable Production] for the Silver:
$2,848,769 / 810,620 oz = $3.51 per oz[/QUOTE"
