Industry average: $313
This formula, like the others is rather straightforward as all that is needed is:
- Market Cap
- 2P Reserves
Formulas: Market Cap/2P Reserves Using Jaguar Mining
Market Cap: 543,000
2P reserves: 4,300
Results ==> 543,000/4,300 = $126.29
Again, it is very cheap on a relative basis according to this metric
Like step 1 you can include a small % of M&I resources as it is likely a portion of it will be converted into 2P reserves at some point in the future. I.e 4m ounces of M&I * 25% = 1m ounces.
Adjusted 2P reserves = 4,700
Adjusted Result = $102.45
One last metric possibly worth calculating, though not very accurate is running a 1-2 regression of the daily prices of a miner against the daily prices of gold or silver.
Next- Developing a Discounted Cash Flow Model ( which will be broken down into two parts).