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Key Assumptions:

Production Guidance for 2025:
- Total Production: 100,000 oz AUEQ.
- Metal Contribution: 50% from gold and silver, 50% from base metals.
- AISC: $1,450/oz AUEQ (midpoint of $1,400-$1,500 guidance).
Metal Prices:
- Gold: $4,000/oz.
- Silver: $100/oz.
- Base metals revenue remains constant (no change from current levels).
Valuation Multiple:
- Free Cash Flow (FCF) multiple: 7x (conservative due to past issues).
Shares Outstanding:
- Fully diluted shares: 200 million (post-convertible debt dilution).
Debt:
- Total debt: $18M (assume it's paid off gradually).

Step 1: Revenue Estimation (2025)

Gold and Silver Contribution (50%):

Total AUEQ from gold/silver: 100,000 oz x 50% = 50,000 oz.
Gold Revenue (assume 35% of gold/silver): 35,000 oz x $4,000 = $140M.
Silver Revenue (assume 15% of gold/silver): 15,000 oz x $100 = $1.5M.

Base Metals Contribution (50%):

Current FCF from Campo Morado (base metals): $20M.
Increase from Tahuehueto ramp-up: $15M additional revenue.
Total Base Metals Revenue: $35M.

Total Revenue: Gold & Silver: $141.5M + Base Metals: $35M = $176.5M.

Step 2: Free Cash Flow (FCF) Calculation

Total Costs: 100,000 oz x $1,450 = $145M.
FCF = Revenue - Costs: $176.5M - $145M = $31.5M.

Step 3: Valuation

Market Cap = FCF x Multiple: $31.5M x 7 = $220.5M.

Step 4: Stock Price Calculation

Stock Price = Market Cap ÷ Shares Outstanding: $220.5M ÷ 200M shares = $1.10 per share.

Conclusion:

If gold reaches $4,000/oz and silver reaches $100/oz, Luca Mining's stock price could reach approximately $1.10 per share, assuming they meet their 2025 production guidance and achieve cost control. Further upside could come from exploration success, higher production, or debt reduction.

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Disclaimer

The user RockeTeller holds no position in TSXV:LUCA. Simply Wall St has no position in any of the companies mentioned. 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.

If gold reaches $4,000/oz and silver reaches $100/oz