To estimate Jaguar Mining’s stock price if gold reaches $4,000 per ounce, we will follow a similar approach as with Steppe Gold, adjusting for Jaguar’s specific production and financial situation.
### Key Assumptions:
1. Future production (2026 target): 150,000 oz annually.
2. Gold price: $4,000 per oz.
3. AISC: Let's assume Jaguar can lower its AISC to $1,200 per oz, as they are aiming to improve efficiency and production costs.
4. Debt and cash: $3 million in debt, $22 million in cash.
5. Current market cap: Approximately $150 million (as their share price is down 80%).
6. Current share count (post-split): 72.7 million shares (factoring in the 10-to-1 reverse split in 2020).
### Step-by-Step Calculation:
1. Revenue at $4,000 gold:
- 150,000 oz * $4,000/oz = $600 million in annual revenue.
2. Cost of production:
- 150,000 oz * $1,200/oz AISC = $180 million in annual production costs.
3. Pre-tax Profit (EBITDA equivalent):
- $600 million (revenue) - $180 million (costs) = $420 million in pre-tax profit.
4. Estimation of Free Cash Flow (FCF):
- Assuming 70% of pre-tax profit converts to FCF:
- $420 million * 0.7 = $294 million in annual free cash flow.
5. Valuation multiple:
- Let’s apply a conservative 5-10x FCF multiple, considering their improved financial standing and growing production. We’ll use a 7x multiple for this calculation:
- $294 million * 7 = $2.06 billion market cap.
6. Stock price calculation:
- If Jaguar Mining achieves a market cap of $2.06 billion, the stock price would be:
- $2.06 billion / 72.7 million shares ≈ $28.35 per share.
### Conclusion:
If gold reaches $4,000 per ounce and Jaguar Mining successfully increases production to 150,000 oz annually with an AISC of $1,200, the stock could potentially rise to around $28.35 per share. This is assuming they maintain financial discipline, avoid significant dilution, and the company re-rates accordingly.
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