I see a little misinformation about TVX. There is some good news and some bad news. First the bad. TVX is not as flush as some suppose. Look at their balance sheet. They are the kings of accounting subcategories but after your put it all together I show current assets of 248 million and current liabilities as 202. Working cap in liquid form is 46 million.
The gold linked notes do not strike me as the end of the world. The formula as I understand it calls for cash or stock issuance to the tune of 2.761 oz times the POG (260) or 718/1000 note. There were 234 million face value out most recent quarter, so at today's POG, they would have to issue $168 million in new stock to convert.
So what's left. Assuming a 1.10 stock, we have a market cap of $208 million (168 from converts and 40 for current shares). Subtract the 46 million working cap, and we get an enterprise value of 162 million. For that EV, we have a decent balance sheet with no debt. There is TVX/Normandy which is not too shabby a mine portfolio relative to the industry. Could TVX get 180 million from NDY today for it? Probably not, but 125 seems quite conservative. So that means the low cost Greek project is valued at 37 million.
The last number merely illustrates that advanced stages deposits are valued far too cheaply by the market place. And TVX is just typical. The following also have low cost deposits valued a just a few dollars per ounce. Look them over and you will see for yourself: Minefinders, Metallica, Madison, Great Basin, Gabriel, Francisco Gold, El Dorado, Corner Bay, Cumberland, and Birim. And there are more.
So the only question the TVX investor needs to ask is: would a substantial low cost advanced stage deposit that is permitted be nearly worthless. If the answer is yes, the buck price is justified. I wouldn't bet the farm on this one stock, but as part of a low cost deposit (popcorn) portfolio there's money to be made. That's how I'm playing it. |
