I have followed nevsun in the past but am not invested in it or following it closely at the moment. I agree with you about Africa. One Canadian junior with projects in Africa that I have a huge position in is Searchgold Resources with alluvial diamond operations in Guinea and a very promising low production cost and low capex gold project located in the stable African country of Gabon and that is in the process of completing a feasiblity study. The gold project also has large upside potential that is not reflected yet in this feasibility study which is focused on the low cost open pit portion of the deposit. It also appears to have completed a wave 2 correction and to be on the verge of starting wave 3 up (but I will defer to your judgement on this EW call):
stockcharts.com[w,a]waclyyay[pc10!c50!f][vc60][iUe50,200,20!La12,26,9]&pref=G
RSG 12-18 month price projection:
Assumptions for the next 12-18 months with Mandala diamond mine and Bakoudou gold mine in production:
Net annual cash flows generated from the Bakoudou gold mine:
o With Zone A containing 200,000 ounces of reserves;
o 5-year production scenario at a rate of 40,000 ounces/year;
GOLD price per ounce: 450 USD 500 USD
Total annual income: 18,000,000 USD 20,000,000 USD
Annual operating cost *: 7,724,000 USD 7,724,000 USD
Net annual cash flows: 10,276,000 USD 12,276,000 USD
* Source: Met-Chem Canada - Bakoudou Pre-Feasibility Study, February 2004
Net average annual cash flows generated from the Mandala diamond mine: 1,500,000 USD *
* Source: Peter Walker - Mandala Pre-Feasibility Study, July 2004
Assuming 70,000,000 shares issued (current: 53,000,000) and a multiple of 10 times projected profits, SEARCHGOLD’s shares could be worth:
GOLD at 450 USD:
$11,776,000 US = 0.17 USD x 10 = US$1.70 = CDN$2.07 share
GOLD at 500 USD:
$13,776,000 US = 0.20 USD x 10 = US$2.00 = CDN$2.44 share |
