Euro Sun Mining Inc T.ESM

Rovina: Conservative Estimated Value of $5.51 U.S./share

[geezer21]

Estimated Value of Euro Sun's Rovina Valley Deposits

Introduction

Euro Sun's Rovina Valley mineral assets currently are conservatively worth $ 5.51 U.S./share as they sit now based on:

-  the lower end average of prices paid per ounce for in-situ deposits over the last number of years. That places an estimated value on Rovina's 11.41 million gold equivalent ounces of  $24.145
U.S./gold equivalent ounce or $275,500,000.00 in total.   See data and calculations below.

-  50,001,183 million outstanding shares.

It is prudent to estimate the worth of Euro Sun's Rovina Valley mineral assets based on a longer term lower end average.

That valuation will increase when Rovina's mining license is finalized with publication in the Romanian government gazette, a preliminary economic assessment, funding  of the Rovina project in Romania, and appreciation in the price of gold. (worsening macro indicators continue to support a gold price that is rising). 

The stock market is undervaluing Euro Sun since becoming cash positive to the tune of $10 million with Forbes and Manhattan's (F&M) purchase of shares valued at $1.27/each after consolidation (F&M paid preconsolidation $0.07/share on 18 May 2016) and with F&M taking over board and management control to further the Rovina project in Romania. See:

https://www.stockhouse.com/news/press-releases/2016/04/29/carpathian-gold-inc-completes-restructuring

https://www.marketwired.com/press-release/carpathian-gold-inc-closes-10-million-private-placement-announces-board-management-additions-cnsx-cpn-2126730.htm


Data and calculations supporting valuation of the Rovina deposits follow:

 

Euro Sun's Rovina Valley Gold/Copper Project In Romania

The Rovina Valley gold/copper project in Romania is Euro Sun's 100 % owned sole asset.

The Rovina deposit is one of the largest global deposits and second largest in Europe:

https://www.visualcapitalist.com/what-is-the-cost-of-mining-gold/

Rovina has three porphyry deposits with copper credits enhancing economics. Two of the deposits are lower cost open pits to mine.  See the following technical report from AGP Mining Consultants Inc. issued in August 2013:

https://www.eurosunmining.com/_resources/reports/120830_Carpathian_NI_43-101_Mineral_Resource_Update.pdf

Mineral processing will not use cyanide and there are no habitations or historical sites on the properties.

Rovina's mining licence is pending publication in the Romanian gazzette.

Rovina is located in Romania that has reformed its policies to be more inviting to investment:

https://ca.practicallaw.com/7-566-1143?source=relatedcontent

 

VALUE OF ROVINA DEPOSITS - DATA POINTS

                                                      
Here are some data points on what deposits have been selling for:

Goldcorp Buys Kaminack Gold Corp's Coffee Gold Project paying $520 million for 5.2 million ounces of gold (3 million indicated and 2.2 million inferred) or $100/ounce as announced 12 May 2016.

These are ounces in production and not in-situ ounces.  This is only an indication of what Rovina's deposts might be worth once in production. This data is not used here to estimate the value of Rovina's mineral resources as they sit now.

https://www.kitco.com/news/2016-05-12/Goldcorp-Agrees-To-Acquire-Kaminak-Gold-Corp-Add-Coffee-Gold-Project.html

Cipher Research Ltd research showed that of 253 takeovers between 1990 and 2013 the median price paid for gold deposits was $39/ounce and for those deals in Europe the median price was $39/ounce.  For more see:

https://www.stockhouse.com/companies/bullboard/c.cpn/carpathian-gold-inc/1?postid=24527068

 

Barrick Gold Corporation sold its Spring Valley and Ruby Hill projects in Nevada to Waterton Precious Metals Fund for $110,000,000 as announced in a Marketwire news release, 17 December 2015.

For about 5.5 million ounces Waterton is paying about $20.37/ounce.  For more detail see:

https://www.stockhouse.com/companies/bullboard/c.cpn/carpathian-gold-inc/2?postid=24394373
 

Danny Deadlock valued, 10 Octover 2015, Teranga Gold reserves at $280 million dollars using $40/oz  for measured and indicated and using $20/oz for inferred.

https://www.stockhouse.com/opinion/ticker-trax/insights/2015/10/09/57-cent-teranga-an-attractive-2016-gold-speculation

Zhaojin Mining Industry announced on Monday, 1 June 2015, it paid $55.59/ounce for 470 tons of gold in the Haiyu gold mine:

https://www.scmp.com/business/companies/article/1814414/chinas-zhaojin-mining-spend-185-billion-yuan-bring-gold-mine

Coeur d'Alene Bought Paramount Gold & Silver's San Miguel project for $136,000,000.00 for 2,873,000 measured and indicated gold equivalent ounces at Paramount's San Miguel project or $47.34/ounce, a premium over what ounces have been going for in 2014.

Coeur needed the ore and San Miguel was right next door to their operating plant.  They were willing to pay a premium.

Managing Director Bill Beament of Northern Star Resournces who has been acquiring Australian gold mines the last two years says "...we are adding mineable ounces with a $500 to $600 an ounce margin for $30 to $50 an ounce ...." as quoted in the Sydney Morning Herald, 22 May 2015:

https://www.smh.com.au/business/mining-and-resources/northern-star-resources-says-gold-acquisitions-getting-expensive-20150521-gh6t2i.html


Timmins Gold announced on 24 December 2014 it bought Goldgroup's flagship Caballo Blanco project in Mexico for $31,000,000.00 ($10 million up front, 16,065,000 in Timmins shares,and $5 million upon completion of enviromental assessment or closure). 

Caballo resources include 575,000 oz. Au indicated and 419,000 oz. Au inferred, and 17,808 oz. Au equivalent in silver (1.3 million ounces) for a total of 1,011,808 oz. Au and oz. Au equivalent.

In total, Timmins Gold paid $31 million or $30.64/oz.  Here is the news release:

https://www.timminsgold.com/news/2014/index.php?&content_id=299


Peter Besler says:

Recoverable reserve value: A simple way to value reserves is to add 5% of the measured resource, plus 2% of indicated resources, plus 0.5% of inferred, and then multiply that number by the spot price of the metal (for example, US$ per oz.).  Always remember to multiply this figure by the forecast recovery rate (90%, for example)

$1,200/oz x .05 x .9 = $ 54/oz for measured
$1,200/oz x .02 x .9 =  $ 21.60/oz for indicated
$1,200/oz x .005 x .9 = $ 5.40/oz for inferred

https://www.miningmarkets.ca/news/how-much-should-you-pay-for-that-junior/1002262681/?&er=NA


Stockhouse Poster Pepper123 quoting from a local paper on 30 September 2014 said:

"Reserves measurement falls into five categories, each with a higher level of confidence, based on expensive drilling to prove those reserves. The levels from lowest to highest confidence are inferred, indicated, measured, probable and proven. Inferred reserves mean the company has something but doesn’t know how much or what grade. On the other end of the scale, proven reserves are something banks may use as collateral to lend money. Gold exploration companies can be approximately evaluated within a range based on this data and the state of the gold market. For inferred reserves, the rule of thumb is $5 to $10 value per inferred ounce of reserve. The higher value is assigned when gold mining stocks are in a upswing. Indicated resources have a value between $20 an ounce and $25 an ounce. Measured reserves are valued between $40 and $50 an ounce while probable reserves run from $75 to $100 an ounce. Proven reserves range from $100 to $200 an ounce and can hit $500 plus when gold buying fever strikes the markets.,"

https://www.stockhouse.com/companies/bullboard/t.cpn/carpathian-gold-inc/183?postid=22984945


Nick Wright from SNL Metals and Mining reported that, "Yamana and Agnico Eagle paid US$3.49 billion for Osisko's US$28.46 billion of gold in reserves and resources," in the first half of 2014.  At a gold price of $1,250/ounce they paid a high price per ounce:  $1,250 x 3.49/28.46 = $146/ounce

https://www.snl.com/InteractiveX/Article.aspx?cdid=A-28948991-9002

                                                           
ANALYSIS

To conservatively value the Rovina deposits a prudent approach is to use the lower end of industry average paid per ounce as reported by Pepper123: $40/oz for measured, $20/oz for indicated, and $5/oz for inferred. 

Based on that Rovina's deposits are conservatively valued at $275,500,000.00 U.S. or $5.51 U.S./share post consolidaton based on a low end valuation of $24.145 U.S./gold equivalent ounce derived form a weighted average of the number of ounces in each confidence catagory of measured, indicated, and inferred and based on 50,001,183 million outstanding shares effective consolidation on 12 September 2016.

Confidence Category     Million       $/oz            Total millions
                                       ounces

Measured (Eq. oz)           2.8            40                 112.0
Indicated  (Eq. oz)           8.03           20                160.6
Inferred     (Eq. oz)            .58             5                    2.9

Totals  (Eq. oz)              11.41        $24.145        $ 275.5    or  $5.51/share  

Euro Sun's enterprise value post consolidation on 12 September is:
 

at $1.10/share is  $55,001,301.00 market cap plus $ 10 million =  $65,001,301.00
at $1.20/share is  $60,001,420.00 market cap plus $10 million =  $70,001,4210.00
at $1.50/share is  $90.002,129.00 market cap plus $10 million =  $100,002,129.00

Euro Sun's enterprise value is considerably less than Rovina's estimated deposit value of $275,500,000.   The stock market is under valuing Euro Sun.
   
Final issuance of the Rovina mining licence will increase the deposit value.