Standard valuation measures don’t work well for assets not yet in production. Earnings based multiples need EBITDAs and NPATs to work with, and if you don’t have them, you have to fall back on other methods.

Also, there’s always an amount of guess work to derive a plausible revenue line (assumed mix of grades, recoveries, processing, production, and more, depending on the commodity), to which you may subsequently apply a multiple (or go down the path of a full DCF) to derive your valuation.

However, surely some part of the enthusiasm for CHN (Chalice) and palladium more broadly, is just a function of the same price surge that’s affected all commodities.


Until production phase, pre-earnings (or even pre-revenue stocks) are somewhat analogous to concept stocks, and if you get the concept right, might do very well.

But the share price trajectory below does seem to be skyrocketing on the back of the same general macro phenomena (the reopening meeting COVID impact supply constraints)…


…which gets conflated with the idiosyncratic demand and supply dynamic of the producer (outlined below).


Somewhat tongue-in-cheek, we’d note that often, for small cap miners, receiving the index inclusion acts as a “kiss of death” from a market timing perspective, and the stock would appear to be meaningfully down from that momentous occasion.

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