Value,vols &0 variables16 Nov 2022 10:05
I'm pretty sure most holders of WA gold shares consider their holdings are significantly under-valued by the mrkt. I think they may have a point. The total value of the six i follow is c.£80m as of today.
Now I don't know the value of the gold in the ground of the above but surely its higher than their combined mrkt cap of £80m. Mali the 3rd largest produces more than 61m/t as does Burkina Faso so there's plenty of the stuff there if you can extract it economically.
As we know its very difficult to get your head around the mining jargon as to inferred, probables, vols, variable quality etc,.... when attempting to value the producing assets. A fair bit of educated guesswork is needed and much luck in a 2m+ozs gold strike.
So, given you have a gold mine with a 10 yr life span and you expect it to produce worst way 40,000 ozs annually, then over the period 400,000 ozs at an AISC of c.$100 will give you $40m clear, give or take on the back of your B&H Gold *** pckt.
Many will say that is small potatoes but given the risks which are very high in WA, I think its a fair assessment with scope to be wrong on the upside. One further point I'd make, I don't like to invest in gold miners with more than 250m fully diluted outstanding and preferably few nos of nil paid options, warrants, $ notes and debt.
PAT has 137m in issue so scope for dilution if needed which some of the other WA outfits don't have. Oriole (3bn) and RRR (1bn) cases in point. Making the nos as opposed to "making up" the nos is going to be a tough ask for those companies if they have to "go it alone". So far PAT has escaped those traps for the unwary investor but its still a 50:50 bet for me on all the evidence to date.
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