OTCQX:BGMZF - Post by User
Post by
RedHorizonon Aug 14, 2012 10:16pm
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Post# 20218211
Super Conservative Valuation
Super Conservative Valuation Let us not forget that even without Cow Mountain BGM is worth $2/share. Bonanza Ledge is a permitted imminent producer of 25,000 ounces per year with an expected cash cost of $488/ounce,
$1,600 gold results in $27.5M in pretax cash flow per year. 10 x this number yields a market cap of $275M which is $2 per fully diluted share. Bonanza Ledge's mine life will increase with the Mintec and Snowden 43-101's which will be out soon. I consider a multiple of 10x to be appropriate because Canada is the most pro-mining nation in the world.
This analysis completely ignores the value of Cow Mountain. Consider Cow Mountain at this point to be a free call option with multi-billion dollar upside potential for the company, and no expiration date. BC Vein is a deposit which is physically adjacent to Bonanza Ledge and will extend the mine life of Barkerville Mountain production over the long term, both in terms of years and ounces per year.
Conclusion: $2 per share should be the floor for the BGM share price.
GLTA longs