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Allied Nevada Gold ┼×irket Message Board

  • rotsevni_eulav rotsevni_eulav Feb 22, 2013 7:10 PM Flag

    ANV Valuation

    Using information provided with today's press release I came up with the following DCF valuation of the Hycroft mine:


    1. Current gold price of $1580/oz that will increase 3%/year along with production costs
    2. Present value production costs with Ag as by-product credit of $585/oz for 2013-2014, $146/oz for 2015-2024 and $365/yr for 2025-2031 (19 yr total mine life)
    3. Gold production rates (millions oz) of .2500 for 2013-2014, .5516 for 2015-2024 and .3603 for 2025-2031
    4. Tax rate of 20% on EBITDA
    5. CAPEX as described and distributed in latest presentation on website + $22 million/yr for maintenance
    6. Discount rate of 10%

    This gives a valuation for Hycroft of $41.41 per share.
    Using presentation assumptions for Hasbrouck, I would value it at about $1.68 per share for a total of $41.71 per share.

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    • Recent decline in price is due to two factors, IMO. One, the decline in gold price and two, the reduced reserves reported by ANV in latest press release for Hycroft along with reduced forecast production rates. The reduced reserves and production rates, assuming constant gold price of $1580/oz, reduced my valuation estimate for ANV from $44.54 to $41.71, or 6.4%. A reduction in just gold price from Feb 14 of about $1640/oz to $1580/oz resulted in a valuation decrease for ANV from $44.22 to $41.71, OR 5.7%. The total valuation decrease from my model was therefore 12.1% compared to an actual price decrese in ANV of about 15.4% since Feb 14. I imagine the reason ANV trades at a discount to my model is due to lower expectations for future gold prices and/or higher discount rates used by other market participants (or my simple DCF model may be wrong!).

    • That should have been $40.03 per share for Hycroft, $1.68 for Hasbrouck and $41.71 total. Sorry!

      • 4 Replies to michaelmbissell
      • I Can NOT believe how low this stock got today!! I sold at $23 late fall as I needed cash, and was sad that I sold at such a low price. I bought back this morning at $19.09 and was glad I didn't use all my funds and was able to buy more at $18.18 this late afternoon. The way this poor stock has fallen today though, I sure hope I didn't make a huge mistake! I think this stock just likes to fall after earnings reports. And all the short sellers...BOOO
        Curious if this stock will continue to fall tomorrow, or if we have already hit a low, but it has to start going up by Monday!

        Sentiment: Buy

      • what do you think the implied IRR is of your model at the current price? also, are you valuing silver at current prices as well?

      • And there is no way gold is less than $2k in 5 years. The only question is has the global economy completely imploded and gold companies become some sort of a utility managed by the government.

      • Thanks for the thorough valuation model. Looks quite reasonable. One question: how much does $100 up or down in the gold price affect the final stock price estimate?

        Thank you!

        Sentiment: Buy