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The stock market is currently valuing Goldcorp (GG) at $36.8 billion. This valuation represents a significant discount to GG's true value, based on its assets.

Estimated Reserves, Proven and Probable

Gold

  • 62.25 million ounces
  • $1715 per ounce
  • $106.75 billion

Silver

  • 1.3 billion ounces
  • $33 per ounce
  • $43 billion

Copper

  • 5.4 billion pounds
  • $3.81 per pound
  • $20.5 billion

Zinc

  • 17.5 billion pounds
  • $0.95 per pound
  • $16.6 billion

Lead

  • 7.2 billion pounds
  • $0.96 per pound
  • $6.9 billion

Based on these numbers, GG's reserves are valued at $193.75 billion. However, this is not the number that should be used to calculate what GG is worth. Rather, we need to subtract the costs involved in mining the metals. The best way to account for GG's expenses involved in mining is by looking at GG's margins.

GG's operating margins currently stand at 42.5%. By applying this number to the reserve ratio ($193.75 billion) we find that GG's reserves are really worth about $82.3 billion after mining costs. However, this is still not the final value of GG. We still need to account for expenses such as taxes and interest payments on debt. The net profit margin will accomplish this.

GG's net profit margin currently stands at 30%. By applying this number to the reserve valuation ($193.75 billion) we find that GG is worth a minimum of $58.125 billion based on asset valuation.

There are currently 809 million shares outstanding for GG. By dividing the $58.125 billion by 809 million, we find that the valuation for GG should be about $71 per share.

GG is undervalued based on the current valuation of its assets.

Source: Goldcorp's Assets Value It At $71 Per Share