Gave a read through this question and I believe I understand the following:
- NAV is the sum of a companies assets; represents the value if the company was liquidated
- Market Cap is (shares outstanding x share price) and represents the market's perceived value (today + future value)
The former straightforward, it's the latter that confuses me, but mainly when it comes to commodities (e.g. copper).
If we look at a company like Amazon, it makes sense that the share price, representing how much an investor is willing to pay for 1 piece of Amazon, would be higher than Amazon's NAVPS. Amazon may build a server system and have proprietary software that has a fixed worth of $200M (fake number). Assuming Amazon had 100M shares outstanding, it's reasonable to assume that Amazon shares would trade higher than $2/share because Amazon generates revenue from server compute time, server space and licensing their software. This is the "future value" baked into Amazon's market cap and share price.
But how does this apply to a copper miner? They have a mineral resource that has a valuation (a feasibility study) at a certain price and it's applied to, giving their resource a Net Present Value with a Discount Rate (generally 8%). For simplicity, let's assume their statements say the NPV8 of their copper deposit is $300M. When they contract out their supply of copper, the value for which they are going to get is known and the resource is finite, so unlike Amazon they don't have the potential to generate revenue year over year without depleting the deposit.
So why would a mining company have a market cap beyond the value of their finite resource?