The other London listed name worth a look is Brancote trading at 154 pence. brancote.com
They have 60% of the exceptional Esquel project in Argentina. In Feb. an 4.35 million oz Au eq. resource (2.6 to Brancote) was announced after 51,000 meters drilling. Discovery cost has been an incredible $2.40 oz. About three-fourths is high grade over 10g, so costs will likely come in below $100. Phase IV since Feb. will add additional ounces, and the pre-feasibility will be out in October.
There have been three majors kicking the tires here, but the offers were inadequate in Brancote's view. When you look at the blue sky in the stock you can see why a deal wasn't made. There are 64.47 million shares out and after currency conversion US mkt cap is a rich $138 million. Assuming Brancote's share is three million ounces (but expanding) that's $46/oz at just current trading levels, and much more if a premium were needed for a takeover. Great property (really the only one in the world that is over four million oz, below $100 cost with reasonable capex), but majors are going to have to pay up. In terms of better valuations in this ultra low cost (below 120) genre I'd stick with FGX at 6.50 (about $12/oz after subtracting cash and adding a million oz SWAG resource for Marlin) or GBU on a dip below 3.25 (would be about $14/oz for Rosia Montana). Or better yet take a shot at the higher cost $140-150 c.c (but still top quintile)names like Delores (MFL) or Kisladag (ELD) where valuations are only a few bucks an ounce.
BTW, there is a tremendous read for anybody who has an interest in this sector, or for that matter good business books. Good insights on the tactics used in making a deal for a world class deposit (at least in a seller's market). I started yesterday morning and couldn't put it down all day. My wife did make me walk the dog, and I took a few trips to frig, but was so engrossed I finished it all yesterday. That's saying something because I usually only finish about a fourth of the books I start. You can get it at Amazon and it takes a few weeks:
"The Big Score", Robert Friedland and the Voisey's Bay Hustle", by Jacquie McNish. |
