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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers
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To: Gib Bogle who wrote (10935)5/10/2006 7:36:18 AM
From: Mr. Aloha  Read Replies (2) of 78419
 
I wouldn't buy YZC. Their feasibility study revealed horrible project economics with their low annual revenue relative to the capex costs and other costs. With negative NPV's in their base case, I have doubts that they'll be able to get financing for their project. Even their "forward prices" scenarios show a NPV far lower than their market cap (less than 1/20th their market cap using a 10% discount rate), even after yesterday's selloff and even using a 0% discount rate(who's going to give them 0% money?). Even using "current prices," the NPV using a 10% discount rate is less than the current market cap.

Maybe someone will give them $155 million for the horrible project returns shown in the study, but I'm not going to pay several times the "Forward Prices" scenarios NPV to find out. I'll let others take that gamble, especially at the current price/market cap.

For me, there are far better investments elsewhere. With about 6 times the shares outstanding (fully diluted) YZC still has a market cap about the same size as MMGG's, yet MMGG will likely have about 5 times the annual zinc production, far better project economics, and they could have a lot more silver and copper. They also have a much better looking chart for the long term I'd much rather buy MMGG here than YZC.
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