RE:RE:RE:Trending nicely towards similar Bruce Jack valuationcapit123 wrote: Couple of comments re your post as I believe you are a little light on AOT’s future profit.
From the recent zoom call with Derek, he indicated that we will be producing at 2,500 tpd with the capacity to move it to 3,000 tpd. Our all-in costs will be in the $1,000 - $1050 range (I will use $1025)
I also believe you are light on the grade as I believe Derek indicated on a previous call that the expectations were to be in the 7.5 + range (I will use 7.5)
POG in 2021 (pretium takeover) averaged $1,800 today we are at $2,039 today (I will use $2,000)
The exchange rate during the Pretium take over was .80 and today it is .745 (I will use .75)
Perhaps improperly, but I am ignoring the stream as Brucejack had a 1.2% nsr and ~$100 million in debt
(calling it a wash as we have a higher stream, bur ~ $14m debt, with the ability to pay the stream down)
Pretium AISC of $1,071, gold price ~ $1,800 = profit $729 X 350,000 oz’s = $255,150,000 / .8 = $318.937,500 Cdn profit.
AOT @ 2500 tpd x 360 days X 7.5 grams / 28.5 g/oz = 238,095 ounces …… (285714 @3,000 tpd)
$2,000 - $1,025 = $975 profit x 238,095 oz’s = $232,142,625 / .75 = $ 309,523,500 profit ….. (@3,000 tpd $371,428,200 profit)
So I have us pretty close to par given the increased POG and the lower Cdn dollar.
With a similar offer on a fully diluted basis (~650 M shares) = $4.31 / share.
I may have taken a few liberties, but we are in a rising gold market / weakening US $, and every increase in the POG goes right to the bottom-line profit. Also, I don’t think Ccori Apu will take us out, but rather merge the Co’s together, giving them access to Toronto / NY exchanges which will bode even better for the shareholders as we will be a mid-tier producer +600,000 ounces.
Very attractive future as I see it
Okay lets take a look at your numbers as its always good to hear different opinions. In looking at the 2020 feasability study the dilluted average gold grade is 5.9 grams per tonne. That i assume is the mill feed grade as of course mining especially these nuggety narrow deposits is not easy and there will be dillution.
Allowing 5.9 grams per tonne x 2500 tonnes per day that equals aprox. 14,750 grams per day or aprox. 475 ounces of gold per day. Then of course you have to factor in that recovery is forecast at aprox. 91% so that equals aprox 432 ounces of gold per day. x30 days per month equals aprox.
12 989 ounces of gold per month or aprox. 156 000 ounces per year. From that we have to subtrace maintence shut downs, breakdowns etc. The feasibility study shows that over an 8 year mine life they will produce aprox. 1.059 million ounces of gold or aprox. 132 000 ounces per year of gold and aprox. 250 000 ounces per year of silver. AOTs current presentation states that they will produce 120 000 ounces of gold this year and 180 000 ounces next year.
From any of those numbers the Gold Stream takes 8.75% of the gold and 100% of the silver produced at 10% of prevailing gold prices. Going by AOTs on presentation this year of 120 000 ounces of gold that equals aprox. 10 500 ounces of gold and all the silver to the Stream leaving aprox. 109 500 ounces of gold this year for AOT and aprox. 164 000 ounces of gold next year. Taking a two year average of AOTs production would equal aprox. 137 000 ounces per year. Taking an average of your calculations at 2500 tonnes and 3000 tonnes you come up with aprox 261 000 ounces per year of production against AOTs own numbers of aprox. 137 000. Nearly double what they estimate. I would say you are a little heavy.
As for Pretium the last financial statement before they sold showed aprox. 170$ million in debt but aprox. $220 million in cash and when Newcrest took over aprox. 4 months later there would have been closer to $300 million in cash so Pretium had aprox. $130 million more in cash than debt. Pretium in its last year or two was hitting huge grades of gold such as 73 grams per tonne over 55 metres. Many many of these types of hits were happening. AOT has good grades but nothing like what Pretium was hitting. Pretiums grade was declining over time to aprox. 8.6 grams per tonne at the end and they were only expecting to produce 325 000 ounces or so in there last year. Around double AOTs expected gold production in year two.
As for AOTs AISC it was expected to be $769 US per ounce in the feasability study from 4 years ago. Now they are talking about $1000 to $1100 and by the time production does get going i wouldnt be surprised to see $1100 to $1200 or more. Same thing happened to Pretium and most other mines entering production.
As for exchange rates and Gold price they are better now than when Pretium was sold but there is no guarantee where exchange rates or gold prices will go in the future and anyone buying a gold miner is taking a guess like anyone else so its hard to say how much value current gold prices or exchange rates will be put on by a prospective buyer of AOT.
All things considered i would still say AOT in year two if things go as planned as they usually do with small gold miners starting a mine i would say a market cap. for AOT in a year and a half or so for now about half of Pretiums $3.5 billion Cdn. sale price or aprox. $1.75 billion Cdn. sounds reasonable to me and would produce a shareprice of aprox. $2.70 Cdn. per share. That would equal a nice 6 bagger from my average cost. I would be extremely happy with that.
And if i am wrong and the shareprice goes much higher all the better for everyone. One way or another i think we have a real winner in AOT. The long wait is nearly over and construction is almost done and in a couple months we should be pouring gold. Even 110 000 ounces this year of gold for AOT should result in aprox. $130 million Cdn. of Free cashflow this year and aprox. $180 million Cdn. next year for a total of $310 million in Free Cashflow over the next two years for a company with no debt and a $400 million market cap.
This thing is going to be a gold mine.
Good luck to all.