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To calculate the stock price of West Red Lake Gold Mines if gold reaches $4,000 per oz, we need to estimate their potential free cash flow (FCF) based on the projected production and costs. Here’s how to approach it:
### Assumptions
1. Production from Madsen Mine: Targeting at least 100,000 oz per year.
2. AISC (All-In Sustaining Cost): Let’s assume a reasonable AISC around $1,200 per oz (subject to actual conditions).
3. Gold Price: $4,000 per oz.
4. Free Cash Flow Calculation:
- Revenue: \( 100,000 \text{ oz} \times 4,000 = 400,000,000 \)
- Costs: \( 100,000 \text{ oz} \times 1,200 = 120,000,000 \)
- FCF: \( 400,000,000 - 120,000,000 = 280,000,000 \)
### Valuation
If we use a typical multiple for gold producers, let’s say a P/E of 10 for simplicity:
- Market Cap: \( 280,000,000 \times 10 = 2,800,000,000 \)
### Shares Outstanding
Assuming approximately 100 million shares outstanding (you would need the exact number for precise calculations):
- Stock Price: \( \frac{2,800,000,000}{100,000,000} = 28 \)
### Conclusion
If gold reaches $4,000 per oz and assuming the company operates efficiently and achieves its production goals, the stock price could be estimated at around $28 per share, depending on the actual share count and market conditions.
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