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The Mining Valuation Handbook: Mining and Energy Valuation for Investors and Management, 4th Edition by Victor Rudenno

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Chapter 19: Agricola Mining — a hypothetical example

To help put into context many of the issues discussed in this book, a simple hypothetical study is presented in this chapter. The aim is to determine the fundamental value of a company, taking into account the impact of a recent mineral discovery.

Agricola Mining1 is a hypothetical public company listed on a stock exchange. The pertinent information is as follows:

• issued capital: 70 million ordinary shares

• current share price: 50¢

• average daily turnover: $50 000

• shareholders’ funds: $25 million

• cash: $10 million

• debt: nil

• company beta: 1.1.

Exploration discovery

The company has made an important discovery of the new commodity metallica. After the initial discovery, a large infill ...

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