A lot of friends have show me companies that have high in-situ value in gold and copper, but the stock just don't go up. They want me to find the answer. We can look at it this way.
How much is it going to cost to take the metals out?
If the cost of extracting the metal out cost more than the metals itself, is it still worthwhile to do so? I guess not. The IR people often use in-situ value to convince the investors to buy into projects that might never be able to go into production. For example, the whole mountain somewhere in Northern BC has 5 Billion pounds of copper. But it cost $15 billion to build the mine. It is huge but it is not economic, mining companies will never look at high capex now in such a market right now.
Full Meaning of In-Situ
What will happen is the company will run out of money someday before it got brought out. They will have to go back to the market and raise more and more money. Your stocks will be end up being diluted and worth less then what you had paid for.
In short, use in-situ value as a reference not as a reason to buy a stock.
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