To calculate the stock price of Endeavour Silver if silver reaches $100 per oz, we can follow these steps based on the projected production and valuation metrics:
### Assumptions
1. Production Estimate: 9 million oz annually starting in 2025.
2. Price of Silver: $100 per oz.
3. All-in Costs (AISC): Expected to be around $20 per oz post-Terronera.
4. Valuation Multiple: We'll use a conservative multiple based on future cash flows.
### Revenue Calculation
1. Annual Revenue:
\[
\text{Revenue} = \text{Production} \times \text{Price per oz} = 9,000,000 \text{ oz} \times 100 \text{ USD/oz} = 900,000,000 \text{ USD}
\]
2. Annual Costs:
\[
\text{Costs} = \text{Production} \times \text{AISC} = 9,000,000 \text{ oz} \times 20 \text{ USD/oz} = 180,000,000 \text{ USD}
\]
3. Annual Free Cash Flow:
\[
\text{Free Cash Flow} = \text{Revenue} - \text{Costs} = 900,000,000 \text{ USD} - 180,000,000 \text{ USD} = 720,000,000 \text{ USD}
\]
### Market Cap Valuation
Using a price-to-earnings (P/E) or price-to-cash-flow multiple to estimate the market cap:
- Assumed P/E or Cash Flow Multiple: Let's use a conservative multiple of 10 for cash flow.
### Market Cap Calculation
\[
\text{Market Cap} = \text{Free Cash Flow} \times \text{Multiple} = 720,000,000 \text{ USD} \times 10 = 7,200,000,000 \text{ USD}
\]
### Shares Outstanding
Assuming the company has approximately 140 million shares outstanding (this figure may vary slightly based on recent financings):
\[
\text{Stock Price} = \frac{\text{Market Cap}}{\text{Shares Outstanding}} = \frac{7,200,000,000 \text{ USD}}{140,000,000 \text{ shares}} \approx 51.43 \text{ USD/share}
\]
### Conclusion
If silver reaches $100 per oz, and assuming Endeavour Silver maintains production and manages costs effectively, the stock price could potentially be around $51.43 per share. This represents a significant upside from its current valuation, making it an attractive proposition for investors.
How well do narratives help inform your perspective?
Disclaimer
The user RockeTeller has a position in TSX:EDR. 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.