Sorry CC, but I think you are behind the curve with SNN. They already have metallurgical data in hand, and are working to complete a pre-feasibility study. I would imagine that will be done by the end of 2007. It should come as no surprise that Cerro De Gallo will be economic, since the pit design parameters are already more favourable than GAM, a deposit with similar grades and net resources. So if we have documented evidence that SNN has an economic and compliant deposit by the end of this year, are you on record to predict that your target of $20-30 for CKG will occur in the same time frame? Also, I must have missed the compliant resource estimate for CKG that proves up a similar deposit, and the accompanying feasibility study to bring that resource up to the same demonstrated economic potential that you demand for SNN before allowing for your target price.
What is the NI43-101 compliant resource that CKG has proven? How do you state that CKG has superior assets. I would argue that one large, near surface deposit of 11 million ounces is worth far more than say 3 or 4 similar deposits that collectively amount to the same total, and I do not see a similar resource controlled by CKG. Please provide me with further information to substantiate your claims. CKG does an atrocious job to keep investors informed, so perhaps you have a better read on their story that I do, but I think that also explains why CKG has performed so poorly in what has been 3 of the best bull market years that the entire sector has enjoyed in 3 decades.
You state that your target price for SNN is $4. That would project to a f/d market cap of only about $520 million. Given that the multiples that were recently paid for companies such as GLG, WTC, and VIA, which come in closer to $100-150USD per resource ounce, and a peer group analysis of market values for GAM, AGI, and OSK, I suggest the market is willing to pay far more per ounce in the ground.
Furthermore, the current resource of 11 million ounces is based on only 100 drill cores. The company has completed more than 250 so far, so the upcoming resource estimate update will likely prove up far more compliant ounces, and quite possibly an increase in grade. So the assets of SNN are likely to continue to increase in value, and so too should the market valuation.
I think your target of $4 is overly conservative but please feel free to correct the assumptions that I have made if you feel there is further information you can share to illuminate your comments.
cheers!
COACH247 |
