FN may be the better value, based on their gold investments alone. In other words, take away every other investment FN has (O/G, base metals-including Voisey's Bay, platinum, and diamonds), and I think it's still a much better deal than EN.
Hang in there with me, to see if this makes sense. Here is a list of the gold reserves and resources for FN and EN, from FY '98 year-end to the end of 12/31/98)
FN and EN Gold Reserves and Resources (in troy ozs.)
FRANCO EURO
FY '98 Year-end 8,654,000 6,550,000
Plus latest Midas 1,000,000 1,000,000
Plus Meikle 0 52,000
Plus Turquoise Ridge 0 432,000
(assuming plans for year-end '99 work out)
Plus Hemlo ? ?
(wholly owned by FN--EN owns 3% NSR)
Plus Goldstrike (Betze-Post) ? 0
Totals 9,684,000 8,034,000
Now divide this amount
by the number of shs. /80mm shs. /100mm shs.
Equals the reserves and resources
of gold in each share= 0.121 ozs. 0.080 ozs.
FN has 50% more gold reserves and resources per share than does Euro. Something must be wrong in this simplistic analysis, because this means that FN's stock price should be double EN's, based on their gold investments alone! All this includes nothing of FN's Voisey's Bay and other base metals, platinum, O/G, and diamond investments. And this says nothing yet about any increases in the reserves and resources of Goldstrike and Hemlo. (Hemlo is due out the end of this month, I think.)
After the most recent VBN and Aber purchases, FN's cash is lower than EN's ($C414mm vs. $C463mm.) But here again, the larger outstanding number of shares for EN means that cash per share is actually higher with FN ($C5.13 v. $C4.63) than EN.
I must be completely off my nut. Actually, I wanted to buy EN, but every time I looked at it in the last eight months, or so, it just looked more expensive for the money than FN. Maybe it has something to do with the varying degree of difficulty with which the gold comes out of the ground at different locations.
What does everyone think?
Fergie (not of Price Andrew fame) |
