RE: Valuation6 Mar 2021 20:17
I posted a while back pointing out why it is nonsense to say '40m oz in the ground, 40m times X pounds an oz gives Y value'. What if half is under a layer of granite and another quarter in some compound form that's expensive to process?
A prospective buyer will assess the available info and deduce how much it will cost to extract X oz over a fixed time span.. say 20 years. And at what profit after the costs of extraction and processing. This formula determines their offer price. But they need info about the resource to do this.
The only way that the resource being large comes into play is that if there's enough there to mine for say 100 years, then at the end of the 20 year period, the resource is worth pretty much what it was to start with, assuming similar demand and accounting for inflation. So the original capital is safe and can be recovered, which is very attractive. If however, the resource is exhausted after 20 years, the original capital is lost and so the profits need to be much larger to account for this.
None of us on this board know anything about the resource other than this estimated 40m oz story. But we don't know how much can be extracted and at what cost. Without a Definitive Feasibility Study, we cannot form an opinion of guess at a value. The company and punters may know far more... it just hasn't been published as a DFS yet. The upshot being that we cannot know what this mine will sell for. As has been said, the bank and legal players involve suggest it ought to be a lot. Which is why I'm in here. But I have no illusions about price. At the least I hope to get y money back, at best make a 3 bagger overnight.
Sign In
Follow the stocks
