What is ACS.V's Intrinsic value?

Archon Minerals Ltd (ACS.V) Intrinsic Value Analysis

Executive Summary

As of June 21, 2025, Archon Minerals Ltd's estimated intrinsic value ranges from $0.24 to $0.28 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $0.28 +86.0%
Discounted Cash Flow (5Y) $0.24 +60.5%

Is Archon Minerals Ltd (ACS.V) undervalued or overvalued?

With the current market price at $0.15, the stock appears to be significantly undervalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Archon Minerals Ltd's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.37 0.75
Cost of equity 5.8% 9.4%
Cost of debt 5.0% 5.0%
Tax rate 26.2% 27.0%
Debt/Equity ratio 0.98 0.98
After-tax WACC 4.7% 6.6%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

  • Forecast Period: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 5.7% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $2 (FY05-2020) to $2 (FY05-2030)
  • Net profit margin expansion from 63% to 46%
  • Capital expenditures maintained at approximately 0% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $0 $29M 81.2%
10-Year Growth $0 $32M 64.8%

Key Financial Metrics

Metric Value
Market Capitalization $8M
Enterprise Value $16M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 0.00
Current Dividend Yield 62.96%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.98

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Discounted Cash Flow (10Y) 55% $0.08
Discounted Cash Flow (5Y) 45% $0.06
Weighted Average 100% $0.26

Investment Conclusion

Based on our comprehensive valuation analysis, Archon Minerals Ltd's weighted average intrinsic value is $0.26, which is approximately 74.4% above the current market price of $0.15.

Key investment considerations:

  • Strong projected earnings growth (63% to 46% margin)

Given these factors, we believe Archon Minerals Ltd is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.