SWA.V WACC - Weighted Average Cost of Capital
The WACC of Sarama Resources Ltd (SWA.V) is 7.3%.
| Range | Selected | |
| Cost of equity | 8.3% - 13.8% | 11.05% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 6.0% - 8.7% | 7.3% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.86 | 1.46 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.3% | 13.8% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 6.0% | 8.7% |
| Selected WACC | 7.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| SWA.V | Sarama Resources Ltd | 1.07 | 0.08 | 0.05 |
| ALTA.V | Altamira Gold Corp | 0.01 | 0.56 | 0.55 |
| GRC.TO | Gold Springs Resource Corp | 0 | 0.26 | 0.26 |
| HAR.V | Harfang Exploration Inc | 0.02 | 1.26 | 1.24 |
| IVS.V | Inventus Mining Corp | 0.01 | -1.32 | -1.31 |
| KG.V | Klondike Gold Corp | 0.01 | 0.32 | 0.32 |
| OMM.V | Omineca Mining and Metals Ltd | 0.85 | -0.75 | -0.46 |
| RGD.V | Reunion Gold Corp | 0 | 0.87 | 0.87 |
| RML.V | Rusoro Mining Ltd | 0.13 | 1.24 | 1.13 |
| RPX.V | Red Pine Exploration Inc | 0 | 1.75 | 1.75 |
| TGM.V | Trillium Gold Mines Inc | 0.04 | 1.35 | 1.31 |
| Low | High | |
| Unlevered beta | 0.32 | 0.87 |
| Relevered beta | 0.79 | 1.69 |
| Adjusted relevered beta | 0.86 | 1.46 |
SWA.V's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for SWA.V:
cost_of_equity (11.05%) = risk_free_rate (4.15%) + equity_risk_premium (5.60%) * adjusted_beta (0.86) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.