Hello all,
Always in the bleachers Brian, Always!
Lets paint a scenario!
EMG currently has roughly 100,000,000 shares outstanding, and if and when EMG goes over a $0.15 the company will need to outline 4,000,000 ounces of the cheap yeller stuff in the resource category at a value of say $25 per insitu ounce. This will raise the stock to $1. According to their press release they have 250,000 ounces in the resource category @ $25/ounce = 6 cents per share, add their royalty in at an npv of 10% over 20 years = 6.5 million which adds say another 7 cents per share, maybe a couple bucks in the bank, which adds the most maybe 1 cent....and maybe 5 cents (say a saleable land price of $5,000,000 @ 100,000,000 shares)
so.........6+7+1+5 = 19 cents and the stock trades at 10-13 cents
so lets take the current gold market and cyclical crap we exist in right now, along with the commodity mayhem, resource sector blues and throw in the imbalance in trust between the investment community and the brokerage community, and then throw in the lacking of professionalism in the EMG management
then throw in the hype and ridiculous IR practices of Marie Shields...
so if we discount the gold in the ground say by 25% then we would have say $17/insitu resource ounce (not saying this is recoverable but say open pittable type resource based deposit) we have 4 cents
discount this hopeful royalty of 70,000/month, 840,000/year, net present value of $6,500,000 at 10% over 20 years we have 3.25 cents
cut the land value in half we have 2.5 cents
divide the 1 cent for management and Marie Shields by 4 we have .25 cents
therefore we have 4.00 + 3.25 + 2.50 + 0.25 = 10 CENTS
and we trade at 10 cents
ta da
so lets say they discover 5,000,000 ounces tomorrow or say have this property that will be announcing soon that currently has a large resource (which i was told they do but they are working out the legalities and will anounce when the lawyer who waited in peru by the Ministry of Mines and Energy's Office until the day the claims expired from exploration to development status gets the work done...and then we can laugh at Southern Peru Copper Co. ....)
what ya think Marie......i know you read this thing...
so (5,000,000 ounces resource x $17/insitu ounce) / 100,000,000 shares = 85 cents.
Comparative analysis:
Eldorado Gold has 4.48 million ounces with say 36% in volatile Turkey
so 4,480,000 ounces x $17/insitu ounce (resource)/85,000,000 shares = $0.90/share
then subtract 36% for turkey assets we have = $0.90 - 36% = $0.58
it trades at $0.55-$0.57..so not bad..and check the credentials of the Eldorado Group...good management..a few PhD's, geologists, engineers etc i think...
so do we have a long way to go......?
YUP
but for 10 cents
not a bad risk............but just think what they have to discover, to get 5,000,000 ounces, how much drilling, how much work.
and they might do well with an IR Professional that has credentials in the mining background, not a hypster...us Vancouver people are a little bored and fed up with Hypsters like Marie...go sell a car...bring in the real IR TEam...and maybe even i will pick up a 20 or 30 thousand shares to follow the rise with the new IR Team
as always
Alastair |
