To calculate the potential stock price for Ausgold Ltd based on their Katanning project, we'll go through a structured approach similar to previous examples, focusing on projected revenue, costs, free cash flow, and market valuation.
Step 1: Production Forecast and Revenue Calculation
1. Projected Production:
- Annual Production: 130,000 oz (based on the Pre-Feasibility Study).
2. Projected Revenue:
Assuming a gold price of $4,000 per oz:
- Revenue Calculation:
Revenue=Total Production×Gold Price=130,000 oz×4,000 USD/oz=520,000,000 USD\text{Revenue} = \text{Total Production} \times \text{Gold Price} = 130,000 \, \text{oz} \times 4,000 \, \text{USD/oz} = 520,000,000 \, \text{USD}Revenue=Total Production×Gold Price=130,000oz×4,000USD/oz=520,000,000USD
Step 2: Cost Calculation
1. Cash Costs:
Projected cash costs are $800 per oz.
- Total Costs:
Total Costs=Total Production×Cash Costs=130,000 oz×800 USD/oz=104,000,000 USD\text{Total Costs} = \text{Total Production} \times \text{Cash Costs} = 130,000 \, \text{oz} \times 800 \, \text{USD/oz} = 104,000,000 \, \text{USD}Total Costs=Total Production×Cash Costs=130,000oz×800USD/oz=104,000,000USD
Step 3: Free Cash Flow Estimation
1. Free Cash Flow Calculation:
FCF=Revenue−Total Costs=520,000,000−104,000,000=416,000,000 USD\text{FCF} = \text{Revenue} - \text{Total Costs} = 520,000,000 - 104,000,000 = 416,000,000 \, \text{USD}FCF=Revenue−Total Costs=520,000,000−104,000,000=416,000,000USD
Step 4: Valuation Based on FCF
Using a 10x multiple on free cash flow for valuation:
Market Cap=FCF×10=416,000,000×10=4,160,000,000 USD\text{Market Cap} = \text{FCF} \times 10 = 416,000,000 \times 10 = 4,160,000,000 \, \text{USD}Market Cap=FCF×10=416,000,000×10=4,160,000,000USD
Step 5: Estimate Stock Price
Assuming Ausgold has approximately 500 million shares outstanding (this is an estimate; please adjust based on actual share count):
- Stock Price Calculation:
Stock Price=Market CapShares Outstanding=4,160,000,000500,000,000≈8.32 USD\text{Stock Price} = \frac{\text{Market Cap}}{\text{Shares Outstanding}} = \frac{4,160,000,000}{500,000,000} \approx 8.32 \, \text{USD}Stock Price=Shares OutstandingMarket Cap=500,000,0004,160,000,000≈8.32USD
Conclusion
If gold reaches $4,000 per oz and Ausgold Ltd successfully ramps up to an annual production of 130,000 oz, the estimated stock price could be around $8.32 per share. This reflects the significant value of their Katanning project and potential future upside if resources expand or lithium targets are developed.
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Disclaimer
The user RockeTeller has a position in ASX:AUC. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.