Intrinsic value of Klondex Mines Ltd. - KDX

Previous Close

$4.23

  Intrinsic Value

$0.53

stock screener

  Rating & Target

str. sell

-87%

  Value-price divergence*

0%

Previous close

$4.23

 
Intrinsic value

$0.53

 
Up/down potential

-87%

 
Rating

str. sell

 
Value-price divergence*

0%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of KDX stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  28.85
  14.30
  13.37
  12.53
  11.78
  11.10
  10.49
  9.94
  9.45
  9.00
  8.60
  8.24
  7.92
  7.63
  7.36
  7.13
  6.91
  6.72
  6.55
  6.40
  6.26
  6.13
  6.02
  5.92
  5.82
  5.74
  5.67
  5.60
  5.54
  5.49
  5.44
Revenue, $m
  268
  306
  347
  391
  437
  485
  536
  590
  645
  703
  764
  827
  892
  960
  1,031
  1,105
  1,181
  1,260
  1,343
  1,429
  1,518
  1,611
  1,708
  1,809
  1,915
  2,025
  2,139
  2,259
  2,384
  2,515
  2,652
Variable operating expenses, $m
 
  264
  299
  337
  377
  418
  462
  508
  556
  606
  658
  713
  769
  828
  889
  952
  1,018
  1,086
  1,158
  1,232
  1,309
  1,389
  1,473
  1,560
  1,650
  1,745
  1,844
  1,947
  2,055
  2,168
  2,286
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  248
  264
  299
  337
  377
  418
  462
  508
  556
  606
  658
  713
  769
  828
  889
  952
  1,018
  1,086
  1,158
  1,232
  1,309
  1,389
  1,473
  1,560
  1,650
  1,745
  1,844
  1,947
  2,055
  2,168
  2,286
Operating income, $m
  20
  42
  48
  54
  60
  67
  74
  81
  89
  97
  105
  114
  123
  133
  142
  152
  163
  174
  185
  197
  210
  222
  236
  250
  264
  279
  295
  312
  329
  347
  366
EBITDA, $m
  59
  87
  98
  111
  124
  137
  152
  167
  183
  199
  216
  234
  253
  272
  292
  313
  334
  357
  380
  404
  430
  456
  484
  512
  542
  573
  606
  640
  675
  712
  751
Interest expense (income), $m
  0
  1
  2
  2
  3
  4
  5
  5
  6
  7
  8
  9
  10
  11
  12
  14
  15
  16
  17
  19
  20
  22
  23
  25
  26
  28
  30
  32
  34
  36
  38
Earnings before tax, $m
  3
  41
  46
  52
  57
  63
  69
  76
  83
  90
  97
  105
  113
  121
  130
  139
  148
  158
  168
  178
  189
  201
  213
  225
  238
  251
  265
  280
  295
  311
  328
Tax expense, $m
  5
  11
  12
  14
  15
  17
  19
  20
  22
  24
  26
  28
  30
  33
  35
  37
  40
  43
  45
  48
  51
  54
  57
  61
  64
  68
  72
  76
  80
  84
  89
Net income, $m
  -2
  30
  34
  38
  42
  46
  51
  55
  60
  66
  71
  77
  82
  88
  95
  101
  108
  115
  123
  130
  138
  147
  155
  164
  174
  183
  194
  204
  215
  227
  239

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  64
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  513
  513
  582
  655
  732
  813
  898
  988
  1,081
  1,178
  1,280
  1,385
  1,495
  1,609
  1,727
  1,850
  1,978
  2,111
  2,249
  2,393
  2,543
  2,699
  2,861
  3,031
  3,207
  3,391
  3,584
  3,784
  3,994
  4,213
  4,442
Adjusted assets (=assets-cash), $m
  449
  513
  582
  655
  732
  813
  898
  988
  1,081
  1,178
  1,280
  1,385
  1,495
  1,609
  1,727
  1,850
  1,978
  2,111
  2,249
  2,393
  2,543
  2,699
  2,861
  3,031
  3,207
  3,391
  3,584
  3,784
  3,994
  4,213
  4,442
Revenue / Adjusted assets
  0.597
  0.596
  0.596
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
  0.597
Average production assets, $m
  245
  280
  317
  357
  399
  444
  490
  539
  590
  643
  698
  756
  816
  878
  942
  1,010
  1,079
  1,152
  1,227
  1,306
  1,388
  1,473
  1,561
  1,654
  1,750
  1,851
  1,955
  2,065
  2,179
  2,299
  2,424
Working capital, $m
  45
  -9
  -10
  -12
  -13
  -15
  -16
  -18
  -19
  -21
  -23
  -25
  -27
  -29
  -31
  -33
  -35
  -38
  -40
  -43
  -46
  -48
  -51
  -54
  -57
  -61
  -64
  -68
  -72
  -75
  -80
Total debt, $m
  41
  48
  67
  88
  110
  132
  156
  182
  208
  235
  264
  293
  324
  356
  389
  424
  460
  497
  536
  577
  619
  662
  708
  756
  805
  857
  911
  967
  1,026
  1,088
  1,152
Total liabilities, $m
  138
  144
  163
  184
  206
  228
  252
  278
  304
  331
  360
  389
  420
  452
  485
  520
  556
  593
  632
  673
  715
  758
  804
  852
  901
  953
  1,007
  1,063
  1,122
  1,184
  1,248
Total equity, $m
  376
  369
  418
  471
  526
  585
  646
  710
  777
  847
  920
  996
  1,075
  1,157
  1,242
  1,330
  1,422
  1,518
  1,617
  1,721
  1,828
  1,941
  2,057
  2,179
  2,306
  2,438
  2,577
  2,721
  2,872
  3,029
  3,194
Total liabilities and equity, $m
  514
  513
  581
  655
  732
  813
  898
  988
  1,081
  1,178
  1,280
  1,385
  1,495
  1,609
  1,727
  1,850
  1,978
  2,111
  2,249
  2,394
  2,543
  2,699
  2,861
  3,031
  3,207
  3,391
  3,584
  3,784
  3,994
  4,213
  4,442
Debt-to-equity ratio
  0.109
  0.130
  0.160
  0.190
  0.210
  0.230
  0.240
  0.260
  0.270
  0.280
  0.290
  0.290
  0.300
  0.310
  0.310
  0.320
  0.320
  0.330
  0.330
  0.340
  0.340
  0.340
  0.340
  0.350
  0.350
  0.350
  0.350
  0.360
  0.360
  0.360
  0.360
Adjusted equity ratio
  0.695
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -2
  30
  34
  38
  42
  46
  51
  55
  60
  66
  71
  77
  82
  88
  95
  101
  108
  115
  123
  130
  138
  147
  155
  164
  174
  183
  194
  204
  215
  227
  239
Depreciation, amort., depletion, $m
  39
  44
  50
  57
  63
  70
  78
  86
  94
  102
  111
  120
  129
  139
  150
  160
  171
  183
  195
  207
  220
  234
  248
  262
  278
  294
  310
  328
  346
  365
  385
Funds from operations, $m
  76
  75
  84
  94
  105
  117
  128
  141
  154
  168
  182
  197
  212
  228
  244
  262
  279
  298
  317
  338
  358
  380
  403
  427
  451
  477
  504
  532
  561
  592
  624
Change in working capital, $m
  15
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
Cash from operations, $m
  61
  76
  85
  96
  107
  118
  130
  143
  156
  169
  184
  198
  214
  230
  246
  264
  282
  300
  320
  340
  361
  383
  406
  430
  455
  480
  507
  536
  565
  596
  628
Maintenance CAPEX, $m
  0
  -39
  -44
  -50
  -57
  -63
  -70
  -78
  -86
  -94
  -102
  -111
  -120
  -129
  -139
  -150
  -160
  -171
  -183
  -195
  -207
  -220
  -234
  -248
  -262
  -278
  -294
  -310
  -328
  -346
  -365
New CAPEX, $m
  -83
  -35
  -37
  -40
  -42
  -44
  -47
  -49
  -51
  -53
  -55
  -58
  -60
  -62
  -65
  -67
  -70
  -73
  -75
  -79
  -82
  -85
  -89
  -92
  -96
  -100
  -105
  -110
  -114
  -120
  -125
Cash from investing activities, $m
  -216
  -74
  -81
  -90
  -99
  -107
  -117
  -127
  -137
  -147
  -157
  -169
  -180
  -191
  -204
  -217
  -230
  -244
  -258
  -274
  -289
  -305
  -323
  -340
  -358
  -378
  -399
  -420
  -442
  -466
  -490
Free cash flow, $m
  -155
  2
  3
  5
  8
  10
  13
  16
  19
  23
  26
  30
  34
  38
  43
  47
  52
  57
  62
  67
  72
  78
  84
  90
  96
  102
  109
  116
  123
  130
  138
Issuance/(repayment) of debt, $m
  -18
  18
  19
  20
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
  33
  35
  36
  37
  39
  40
  42
  44
  46
  48
  50
  52
  54
  56
  59
  62
  64
Issuance/(repurchase) of shares, $m
  143
  16
  16
  15
  14
  12
  11
  9
  7
  4
  2
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  141
  34
  35
  35
  36
  35
  35
  34
  33
  31
  30
  30
  31
  32
  33
  35
  36
  37
  39
  40
  42
  44
  46
  48
  50
  52
  54
  56
  59
  62
  64
Total cash flow (excl. dividends), $m
  -15
  36
  38
  41
  43
  45
  48
  50
  52
  54
  57
  60
  65
  70
  76
  82
  88
  94
  100
  107
  114
  122
  129
  137
  145
  154
  163
  172
  182
  192
  203
Retained Cash Flow (-), $m
  -183
  -46
  -49
  -52
  -55
  -58
  -61
  -64
  -67
  -70
  -73
  -76
  -79
  -82
  -85
  -89
  -92
  -96
  -99
  -103
  -108
  -112
  -117
  -122
  -127
  -132
  -138
  -144
  -151
  -158
  -165
Prev. year cash balance distribution, $m
 
  53
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  43
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -16
  -16
  -14
  -12
  -9
  -7
  -4
  -2
  1
  4
  7
  9
  12
  15
  18
  21
  25
  28
  31
  35
  38
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  41
  -10
  -10
  -10
  -10
  -10
  -10
  -9
  -9
  -9
  -8
  -6
  -4
  -3
  -2
  -1
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  0
  0
  0
Current shareholders' claim on cash, %
  100
  97.6
  95.6
  93.9
  92.5
  91.4
  90.6
  90.0
  89.6
  89.3
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2
  89.2

Klondex Mines Ltd., together with its subsidiaries, acquires, explores, develops, and produces mineral properties in Nevada, the United States. It explores for gold and silver deposits. The company holds 100% interests in the Fire Creek Property covering approximately 17,000 acres located in Lander County; and the Midas mine and mill covering approximately 30,000 acres located in Elko County. It also holds 100% interests in the Hollister mine, and the Esmeralda mine and ore milling facility located in the State of Nevada. The company was formerly known as Attila Resources Limited and changed its name to Klondex Mines Ltd. in October 1974. Klondex Mines Ltd. was founded in 1971 and is based in Vancouver, Canada.

FINANCIAL RATIOS  of  Klondex Mines Ltd. (KDX)

Valuation Ratios
P/E Ratio -370.7
Price to Sales 2.8
Price to Book 2
Price to Tangible Book
Price to Cash Flow 12.2
Price to Free Cash Flow -33.7
Growth Rates
Sales Growth Rate 28.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 33.9%
Cap. Spend. - 3 Yr. Gr. Rate 27.1%
Financial Strength
Quick Ratio 6
Current Ratio 0
LT Debt to Equity 8%
Total Debt to Equity 10.9%
Interest Coverage 0
Management Effectiveness
Return On Assets -0.5%
Ret/ On Assets - 3 Yr. Avg. 12.3%
Return On Total Capital -0.6%
Ret/ On T. Cap. - 3 Yr. Avg. 13.8%
Return On Equity -0.7%
Return On Equity - 3 Yr. Avg. 17.1%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 32.1%
Gross Margin - 3 Yr. Avg. 36.2%
EBITDA Margin 15.7%
EBITDA Margin - 3 Yr. Avg. 35.2%
Operating Margin 7.5%
Oper. Margin - 3 Yr. Avg. 13.3%
Pre-Tax Margin 1.1%
Pre-Tax Margin - 3 Yr. Avg. 16.2%
Net Profit Margin -0.7%
Net Profit Margin - 3 Yr. Avg. 17.3%
Effective Tax Rate 166.7%
Eff/ Tax Rate - 3 Yr. Avg. 46.8%
Payout Ratio 0%

KDX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the KDX stock intrinsic value calculation we used $268 million for the last fiscal year's total revenue generated by Klondex Mines Ltd.. The default revenue input number comes from 2016 income statement of Klondex Mines Ltd.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our KDX stock valuation model: a) initial revenue growth rate of 14.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for KDX is calculated based on our internal credit rating of Klondex Mines Ltd., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Klondex Mines Ltd..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of KDX stock the variable cost ratio is equal to 86.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for KDX stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Klondex Mines Ltd..

Corporate tax rate of 27% is the nominal tax rate for Klondex Mines Ltd.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the KDX stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for KDX are equal to 91.4%.

Life of production assets of 6.3 years is the average useful life of capital assets used in Klondex Mines Ltd. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for KDX is equal to -3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $376 million for Klondex Mines Ltd. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 176.106 million for Klondex Mines Ltd. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Klondex Mines Ltd. at the current share price and the inputted number of shares is $0.7 billion.

RELATED COMPANIES Price Int.Val. Rating
FNV Franco-Nevada 99.79 7.82  str.sell
SMF Semafo Inc. 3.22 2.31  hold
THO Tahoe Resource 7.13 2.66  str.sell
Stock chart of KDX Financial statements of KDX
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.