RR,
I suggest you do some serious research and try to understand the nature of the deposit, its geometry, distribution of grades, metallurgy and infrastructure. I would love to discuss these issues with you in an intelligent manner.
<< I don't see any mention of the $1.50/oz cost
figures you've been bandying about. >>
The report by Mintec, very serious mining consultants, suggested that the costs could be lower than $1.50 in the first few years based on a possible 70% recovery rate an a calculated 0.38:1 strip ratio. The life of mine average costs have been estimated at $2.50 with an average strip ratio near 1.09:1
<<How can they attribute $15 million valuation to this deposit without providing any details on its economics ?>>
$15M is the market cap of the stock. The net present value of the deposit as estimated by at least 3 senior analysts is above US$45M.
Preliminary details on the economics have been submitted.
This project is at the scoping/pre-feasibility level and that is why the stock is still very much undervalued. As the risks are removed and all the parameters are confirmed, the price will move higher. There are still some risks, mainly concerning the metallurgy and the ultimate recovery rates, but given the preliminary tests done so far, these are risks that not excessive.
That is why a dozen senior analysts are suggesting that BAY is a speculative buy and a takeover target.
I will agree with you that the recovery rates are not confirmed and could be much lower. But I submit to you that what is more important is the relation between the CAPEX and the ultimate production level. In other words, if they achieved only 50% recovery rates, but don't have to spend on an expensive crushing system, they may have a IRR that is stilll extremely high.
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