GDXJ Daily

GDXJ saw a rally to the 200-day MA. Both the indece and the stock are so far below their 300-day moving averages that they must at some point rally. The company has been in production for almost a year now, since the latter half of February, 2011.

If we set aside discounting for a moment in a net present value calculation, either negative or positive, owing to the fact that processing might double and the gold price will have doubled from $900/oz. to $1800/oz., then we may actually get an idea what the company is valued at in a straightforward calculation if we assume that the low in the chart is the market assigning a 1P/E for forward earnings.

And that ~$1800/oz. is our assumed on-going long-term average gold price, if we take our cue from the weekly gold chart.

22.5¢ X 345,572,541 shares = $77,774,828. 48 net and comprehensive forward - looking earnings for fiscal 2013. That means that the NET PRESENT VALUE over 10 years of the La Ronge Gold Project is something of the order of $800m. This number can go over a billion with the addition of another 300tpd, which is planned.

$77,774,828. 48 X 2 gives us our revenue figure with the cost of revenue added, since costs are ~$900/oz. = $155,489,656.95. This is our presumed annual revenue figure should gold achieve and maintain ~$1800/oz as an average price.

That gives us a production figure of ~86,383 oz. More ounces will be added should the production rate increase by 300tpd.

We arrive at the figure of 10.5 g/t average grade @700 tpd. This is well within expectations.

Has the market assigned a forward-looking 1P/E value to the company at the bottom?

supersize: http://www.flickr.com/photos/11747277@N07/6820317861/sizes/l/in/photostream/

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-F6