RE: Bhukia resource upgraded in 2021 to 7.9Moz?29 Sep 2023 14:01
To get things back on track, I'm going to post the research that made me invest here. Note it contains links to back up opinions...
"Ok, here goes my claim quantum effort - no investment advice / DYOR...
IMO there are three key factors that will be used to determine the market value of the investment at the time of the alleged expropriation in 2021; the in ground value of the gold, when the expropriation became public knowledge & the estimated size of the resource at that point in time.
I found this 2015 research report really useful to try and put some meat on the bones of some analysis;
http://www.cipherresearch.com/reports/150601_The-Real-Value-of-Gold-in-the-Ground.pdf
It studied 253 transactions involving gold companies between 1990-2013 and determined that the average price paid per in ground oz was $63. The average price of gold over the 24 year study period was $605/oz. So the average transaction paid 10.4% of the 'in ground' value. That may be skewed by the fact that for 16 of those 24 years gold averaged ~$350, but to me that seems like a sensible figure to use and leaves some upside.
The 1999 BIT states; "The compensation referred to in paragraph 1 of this Article shall be computed on the basis of the market value of the investment immediately before the expropriation or impending expropriation became public knowledge"
Based on this link it looks like 15th March 2021 was when the bill was first introduced; https://prsindia.org/billtrack/the-mines-and-minerals-development-and-regulation-amendment-bill-2021
'Immediately before this on the 14th March 2021 gold traded at $1720, so using the 10.4% figure above, that gives us an in ground market value of ~$178.88/oz
Then we just have to apply that to the resource size. IMO there is no chance PAT are just going to claim for the 2008 JORC of 1.74Moz given how much that figure would have risen in the 13 years between then and the official expropriation. However, even if the arbitration panel decided to use that figure it would still come to a claim size of $311m, or some 20x the current market cap. That's the ultimate downside here IMO.
However, it's far more likely that PAT will utilise the 2 resource studies from the GSI, the 6.7Moz from 2014 or the 7.9Moz from 2021 that I posted earlier on.
6.7Moz * $178.88 = ~$1.2b
7.9Moz * $178.88 = ~$1.4b
That's the size of the prize... and before anyone says they could claim for 10Moz+, they would need some reasonable basis to do so, that is what makes the GSI work potentially so valuable."
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