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I obviously know that this means absolutely nothing unless we get approval and obviously could / will change depending on the terms that GCM agree on, but while its quiet and for a bit of fun as well as out of interest I put the question into an AI program,
“If given approval from the Bangladesh Government, with the current shares in issue, what could I expect the share price to reach”
The answer was ..
# Estimating the potential share price increase for GCM Resources upon approval of the Phulbari coal mining project by the Bangladesh government requires considering several factors, including current market conditions, the scale of the project, investor sentiment, and historical performance of similar announcements. Here’s an analysis based on available information:
1. *Project Valuation and Impact*: The Phulbari coal project is significant, with a projected development cost of around $1 billion and potential to support power generation of at least 6,600 MW for over 30 years. Successful approval could substantially increase the perceived value of GCM Resources.
2. *Historical Market Reactions*: Historical data indicates that announcements related to major project developments have led to significant share price movements for GCM Resources. For instance, the announcement of the $1 billion contract with PowerChina led to a 40% surge in share price
Estimation Approach
To estimate the potential share price increase, we can look at a range of scenarios based on previous market responses to major news and the potential future earnings and cash flows from the project.
1 *Current Share Information*: As of the latest data, let's assume GCM Resources has approximately 100 million shares outstanding (exact numbers would need verification from financial statements or current market data).
2 Historical Price Movement: If the recent 40% increase from the announcement is a baseline, approval from the government might lead to a more substantial increase, considering this would confirm the project's viability and future revenue.
3 *Project's Added Value*: Analysts typically use Net Present Value (NPV) or similar valuation methods to estimate the project's contribution to the company's overall value. A detailed NPV calculation would consider future cash flows, discounted back to present value. For simplicity, let’s assume a conservative scenario where the project adds a net value of $500 million to the company (this is hypothetical and would require a detailed financial model).
## Share Price Estimate….
Given the current market cap, let’s hypothesize:
- *Current Market Cap*: Suppose the current market cap of GCM Resources is around $50 million.
- *Post-Approval Market Cap*: Adding the $500 million project value, the new market cap could be approximately $550 million.
### Summary
If the Phulbari project gets approved and adds substantial value to GCM Resources, the share price could potentially rise significantly. Based on the simplified hypothetical scenario above, the share price could reach around $5.50 per share. However, this estimate is highly speculative and should be validated with a detailed financial analysis and consideration of current market dynamics and investor sentiment.
Investors should consider consulting with financial analysts or advisors who can provide a more accurate and detailed forecast based on comprehensive financial models and current market data.
Excellent searcher.
The new £10 party is a very acceptable $5.50 then 😁
£5.50 or $5.50? I would accept both in all honesty.
Let Hasina sign that contract, then offers will flood in. Highest bidder, PC have leverage though.
GLA
To add, we are talking about a 100 billion asset over 30 years. Some very tasty figures….
So a hundred bagger potential 👊
Searcher, I may overlook something, but with 500 m added value to the present 50m, how can we get from 0.05 to 5 ?
Again I asked the same AI program - How are you working out that the Phulbari coal deposit via open pit mining method if given the green has a value of 500m added value to your present 50m, how can we get from 0.05 to 5 ?
This was the answer ..... but please understand, I am not for one minute saying its totally correct, but I trust AI with their calculations a lot more than I do my own lol
To understand how the value of the Phulbari coal deposit could increase from $50 million to $500 million through the adoption of an open-pit mining method, we need to analyze several key factors that contribute to the overall economic value of a mining project. Here's a step-by-step breakdown:
1 Projected Value with Open-Pit Mining:
Open-pit mining significantly increases production capacity. If Phulbari coal deposit has estimated reserves of around 572 million tonnes and can produce 10 million tonnes annually, this scale-up can drastically increase revenues.
2. Cost Efficiency
Current Operations: Smaller-scale mining operations, such as the existing Barapukuria mine, might have higher per-tonne extraction costs due to limited economies of scale and less efficient mining techniques.
Open-Pit Mining: This method is typically more cost-effective for large reserves because it allows for the extraction of a greater volume of coal at a lower cost per tonne. This increased efficiency can result in a substantial increase in profitability.
3. Market Prices and Revenue
Assuming the market price of coal is $50 per tonne:
Current Scenario: 1 million tonnes × $50/tonne = $50 million annually.
Open-Pit Scenario: 10 million tonnes × $50/tonne = $500 million annually.
4. Import Substitution and Economic Impact
Bangladesh currently imports a significant amount of coal, which is costly. By increasing domestic production, the country can reduce its import bill, saving foreign exchange and boosting the local economy.
Hypothetical Financial Projection
To provide a simplified financial projection:
Current Operations at Barapukuria :
Annual Production: 1 million tonnes
Market Price: $50 per tonne
Revenue: $50 million
Open-Pit Mining Operations:
Annual Production: 10 million tonnes
Market Price: $50 per tonne
Revenue: $500 million
Conclusion
The increase from $50 million to $500 million in value can be attributed to:
Increased Production: Scaling up from 1 million tonnes to 10 million tonnes annually.
Cost Efficiency: Lower cost per tonne through open-pit mining.
Market Demand: Stable or increasing demand for coal.
Import Substitution: Significant savings by reducing coal imports.
This projection demonstrates how developing the Phulbari coal deposit through open-pit mining can multiply its value by a factor of ten, moving from $50 million to $500 million in annual revenue. For more precise financial modelling, detailed feasibility studies and market analysis would be required.
This is the last question I am going to ask AI --
How are you working out that the Phulbari coal deposit via open pit mining method if given the go ahead via GCM has a value of 500m added value to the present 15m, how can we get a share price from 0.05 to £5
To understand how the value of the Phulbari coal deposit can increase from £15 million to £500 million and how GCM's share price can rise from £0.05 to £5, we need to consider several financial and operational factors. Here is a detailed analysis:
1. Production Capacity and Revenue Projections
Current Valuation: The current valuation of £15 million likely reflects limited or no production. This is often based on existing small-scale operations or exploratory stages.
Open-Pit Mining Projections: If the Phulbari coal deposit is developed using open-pit mining, the production capacity can increase substantially. Let's assume the deposit can produce 10 million tonnes of coal annually.
Revenue Calculation:
Market Price of Coal: £50 per tonne
Annual Production: 10 million tonnes
Annual Revenue: 10 million tonnes × £50 per tonne = £500 million
This significant increase in production and revenue justifies a higher valuation.
2. Cost Efficiency and Profit Margins
Cost Efficiency: Open-pit mining is generally more cost-effective than underground mining. It allows for the extraction of larger volumes of coal at a lower cost per tonne.
Cost Calculation:
Cost per Tonne: Let's assume £20 per tonne (due to economies of scale and efficiency)
Annual Production Cost: 10 million tonnes × £20 per tonne = £200 million
Profit Calculation:
Annual Revenue: £500 million
Annual Production Cost: £200 million
Annual Profit: £500 million - £200 million = £300 million
3. Investment and Development Costs
Developing the Phulbari coal deposit will require significant upfront investment. However, the high initial costs will be offset by the long-term revenue and profit potential.
4. Market Dynamics and Demand
Global demand for coal, especially in developing countries like India and China, remains robust. Stable or increasing market prices for coal can positively impact revenue projections.
5. Valuation Multiples
Current Valuation: £15 million
Current Share Price: £0.05
Future Valuation with Open-Pit Mining:
Projected Annual Profit: £300 million
Price-to-Earnings (P/E) Ratio: Assume a conservative P/E ratio of 10
Projected Market Capitalization: £300 million (annual profit) × 10 (P/E ratio) = £3 billion
6. Share Price Calculation
Current Market Capitalization: £15 million
Current Share Price: £0.05
Current Number of Shares: £15 million / £0.05 = 300 million shares
Projected Market Capitalization: £3 billion
Projected Share Price: £3 billion / 300 million shares = £10 per share
Given the information provided, reaching a share price of £5 per share is plausible with successful project development and operational efficiency.
Part 2
Summary
Increase in Production: From limited production to 10 million tonnes annually.
Revenue Increase: Annual revenue projection of £500 million.
Cost Efficiency: Lower production costs due to open-pit mining.
Profit Projections: Annual profit of £300 million.
Valuation Multiples: Conservative P/E ratio applied to projected profits.
Share Price Calculation: From £0.05 to potentially £10, indicating significant upside.
This financial projection demonstrates that the development of the Phulbari coal deposit can significantly increase GCM's market value and share price. Detailed feasibility studies, market analysis, and strategic execution are critical for realizing this potential.
Whether you agree or disagree with the figures that AI has come up with, and what ever way you look at it, one thing is 100% fact, with the green light, the share price will be worth many times more than 5 / 6p
Jeezzzzz I wish I’d never started this thread now 😂😂😂😂
Wowsers.
The £10 party is back on 😮
Do you think the share will be suspended pending news when the GL is finally announced. Don’t see how it will go to these dizzy heights otherwise.
A trading suspension would be fantastic.
Yep and then just open at the higher price.