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Strategies & Market Trends : The Ego Forum -- Ignore unavailable to you. Want to Upgrade?

To: hubris33 who wrote (10595)	9/16/2011 12:19:08 PM
From: Amark$p	Respond to of 12175

Thanks for your comments. One could only wish MDR had 2 gpt gold!! No mining company will likely be placing a bid before the Mine Permit. The bid will come after the Mine Permit. So if the share price runs to $2.50 after the Mine Permit and BFS, then a 50% premium would be $3.75. You are correct though, the extent of the price run up after the Mine Permit and BFS will determine where a potential mining company will place its takeover bid. Mansfield will then have to decide whether to take the bid or build the mine itself. I prefer the takeover and what my analysis shows is it really does not matter much whether a mine company offers MDR $100/oz or $200/oz. Given all-in acquisition cash cost of $600 or $700 with the capex (whether it pays $100/oz or $200/oz) and under 2 year payback to acquiror, the acquisition would be accretive. My analysis used $150/oz. The risks for the acquiror are: 1) Can they build the mine on time and within budget 2) Do they believe the BFS in regard to P&P gold ounces and cash cost 3) Is Argentina country risk acceptable 4) Will gold price stay above $1,600 for the next 3 years If the answers to these are all favorable, then in regard to payback, there is really little difference whether they pay $200/oz or $100/oz. Sure, they would rather pay $100/oz for MDR, but it really makes little difference to the acquiror's IRR on the project post acquisition @ $1,600+ gold price. FWIW, Haywood report dated April 2010 was speculating on a $5 takeover price when MDR did not have a mine permit and price of gold was $1,100 (see page 6) top40goldstocks.com Accordingly, I do not think my $6.40 takeover price is out of line given $1,600+ gold and the Mine Permit approval. But you are correct, if the share price does not run up over $4 post Mine Permit approval and favorable BFS, then I doubt MDR will get a $6 takeover bid. (As an aside, in regard to your comments on 2 gpt projects, please note the Mansfield very low strip ratio of under 1:1, this is what is unique about Lindero and pretty much assures a low cash cost regardless of diesel and other direct costs) Thanks for your comments and would much appreciate comments to this post... :)