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Gold/Mining/Energy : Gold & Gold Stock Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Andrew who wrote (723)	11/17/2003 4:14:41 PM
From: orkrious	Read Replies (1) \| Respond to of 29622

Heinz on CAU Date: Mon Nov 17 2003 15:20 trotsky (Ork@CAU) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved these data need to be revised. the latest mine plan ( post re-design, incorporating new metallurgical and drilling data according to CAU ) estimates capital costs of $80 million for mine construction and cash production costs of $136/oz ( no royalty payments, since Franco pulled out ) . further data: planned production levels: 435,000 ounces of gold and 1,048,000 ounces of silver per year. reserves & resources ( MCDonalds, KeepKool&SevenUp combined ) : 12.8m. oz. gold and 55 m. oz. silver. the 2m. oz. of KeepKool are the 'resources', the rest are reserves. so one would need to incorporate these revised data for a current NPV calculation. however, my $45 estimate was arrived at by simply using the prices that have recently been paid for roughly similar undeveloped reserves in take-overs by majors, since i assume CAU would become a takeover target if I-137 gets overturned. PDG paid e.g. $90/oz. for EAGM's reserves. even higher are the current market valuations accorded reserve ounces - according to mineweb the recent average is $136/oz. one should however add that these prices are only realistic in the current climate, where expectations that higher gold prices are here to stay are clearly more ingrained than they used to be. CAU's most recent feasibility study was done with a gold price of $275/oz. in mind, i.e. the operation would be profitable even then...so it's probably reasonable to expect that the deposit would be accorded a premium in a takeover, similar to EAGM ( where the attraction was the exploration potential, which CAU's property also has ) . so as long as the bull market climate persists, that's how much CAU could potentially be worth...but admittedly everything has to go right for that. CAU's reserves have an additional attraction btw. - they're not hedged. EAGM by contrast already had a sizeable hedge book in place at the time of the Placer bid. Date: Mon Nov 17 2003 14:49 Orkrious (CAU) ID#101247: Copyright © 2002 Orkrious/Kitco Inc. All rights reserved Trotsky, a couple of weeks ago you posted that CAU would be worth $45/share if ( when ) I37 if overturned. I did an NPV calculation with an 8% cost of capital ( probably low ) using some numbers from John Doody who writes Gold Stock Analyst. He thinks they produce 445k ounces per year for 14 years with a cash cost of $188 and capex of $274 million. At a $350 PoG ( clearly low ) and 25 million shares this results in NPV of $12/share. Doody has a target in the mid 30's at $350 PoG, I think because he ignores the mine capex. ( I recognize I'm leaving out 50 mil ounces of silver from my calculations. ) Can you tell explain where you get $45/share? tia ork ( from SI )