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Valuing Junior Mining Play's


jsr
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I feel much of the easy money looks to have been made in the junior sector already last year.

 

Apart of my trading strategy is to be both more qualitatively and quantitatively selective of my Junior mining plays.

 

So how do the rest of you value your companies?

 

Here's a model I have put together today, in an attempt to create a valuation model which can give a quick indication if a junior is cheap, relative to it's peers -

 

 

Value Rating = Future Revenue Factor * Reserve Factor * (Market Cap - NAV) / (Revenue - cost of production - Mining taxes and royalties).

 

 

Reserve factor = Total Measure + Indicated + Inferred. This factor is a difficult one. Will require some thinking as to weighting, regarding ore grade, and reserve type.

 

Revenue: Current or forecast (if pre - production).

 

Future Revenue Factor: Based on amount company forecasts

 

 

I do not even know if this type of valuation model is viable for such a risky sector. Any suggestions welcome.

 

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