I'm glad to see Jeff is going to bat for the stock, but he is just too conservative on his numbers.
By his calculations he values El Sauzal at $5 CDN. That's a little over US 50 million. There is no way a 2.4 million deposit with $86 cash cost is going to go out at $20 an ounce. The returns (IRR)would be astronomical even at $275 POG. We've got to be looking at closer to $50/oz or US 120 million for it. That's roughly $11 a share. Add in the cash which is actually $2.35, putting us at $13.35.
Then we have Marlin, which IMO is pretty open ended. We have clues as to costs. Claude is suggesting $30-50, but let's assume that the next rounds shift or normalize things some and we end up with $75 cash cost. Then let's just look at the million ounces in the bag right now, today. Conservatively, that's worth $50/oz to a buyer, and that buyer would get a bargain. That's another $5.00 share, bringing us up to $18.35. We can debate it, but I believe that's conservative.
But, let's talk about the novel concept of blue sky. Although this notion is used just about everywhere else in modern day speculation, it is apparently forbidden (post-Bre-X) in mining. Nonsense! Marlin is not going to stay at a million ounces. Nothing in the results to date supports such a conclusion. About the only thing I'm debating is whether they find another million, or another four million. Draw your own conclusion, but add at least $5 a share per million oz.
My rather conservative valuation of FGX is closer to $30. At present (@5.00), the stock trades at an enterprise value (subtracting cash) of about US 30 million. That's ludicrous. The only real issue for me on FGX is the speed of the drill out or how fast blue sky gets translated into confirmed results. Are they going to poke along, or pick up the pace?
BTW, I had a couple orders in at $4.80 most of the day Friday. One was a small no restrictions order, and the other was a large AON order. Neither filled. We will see next week. Doesn't really matter though as I've already bet the farm. |
