You seem to be ignoring depletion and corporate costs in your analysis. You only take into account the cash cost of $3.90. These other costs must be taken into account to get a proper net income figure. You are overstating SLW's net income by approx. $3 to $4 an ounce. At $20 AG, realized profit would be $20 - $8.1 (using June 30 costs)or $11.9 per ounce x 23.5M oz = $280M / 358.2M sh = $.78 per share net income. To check the reasonableness of this figure, the estimated income for SLW for 2010 is $.70/sh.
Then apply any PE multiple you desire, but you are ignoring costs that need to be considered when computing the net income.
No one also seems to remember the pricing in of new acquisitions with up front costs of $50-500M. Dilution no matter how swiftly executed, and SLW is excellent at this, takes its toll.
We'll see $30 before we see $24.50 on a consistent basis, but a flirtation with a sell off to the tune of 15% takes us there from an intermediate high of $30.
Auguring forward is our 2.25% degradation against the 2X rule, since SLW is that much behind a strawman gage of moving 2X the POS. That steady state behind the power curve market value of SLW means there is great reluctance to move to higher highs off the all time high, and monstrous rock and roil to be expected next week with huge eco reporting, elections, and QE announcements touted as early as Wednesday.
Good analysis. I think a $50 Ag price by 2013 is reasonable and could prove to be conservative, but we won't still be trading at 30x earnings then because it's unlikely the current growth profile will exist at that point. A 12x PE in 2013 would be strong and reasonable at that point, and still leave significant upside opportunity in the stock price.