What is MAGE's Intrinsic value?

Magellan Gold Corp (MAGE) Intrinsic Value Analysis

Executive Summary

As of May 29, 2025, Magellan Gold Corp's estimated intrinsic value ranges from $2.05 to $2.05 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Stable) $2.05 +1541.1%

Is Magellan Gold Corp (MAGE) undervalued or overvalued?

With the current market price at $0.12, 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 Magellan Gold Corp's intrinsic value, including:

  1. Dividend Discount Model (DDM): Values the company based on expected future dividend payments

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 4.6% 5.6%
Adjusted beta 0.12 0.56
Cost of equity 4.4% 8.0%
Cost of debt 5.0% 5.0%
Tax rate 26.2% 27.0%
Debt/Equity ratio 0.27 0.27
After-tax WACC 4.3% 7.1%

Valuation Methods

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 0.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 6.2%
  • Long-term growth rate: 4.0%
  • Fair value: $-0.89 (-808.2% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 8.0% (Low) to 4.4% (High)
  • Long-term growth rate: 3.0% (Low) to 5.0% (High)
  • Fair value range: $(0) to $5
  • Selected fair value: $2.05 (1541.1% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $3M
Enterprise Value $4M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 0.00
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.27

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
Dividend Discount Model (Stable) 100% $0.31
Weighted Average 100% $2.05

Investment Conclusion

Based on our comprehensive valuation analysis, Magellan Gold Corp's weighted average intrinsic value is $2.05, which is approximately 1541.1% above the current market price of $0.12.

Key investment considerations:

  • Conservative capital structure (Debt/Equity of 0.27)

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